**Exhibit10.99**

 

**[***].  Confidential Treatment Requested – Certain information in thisexhibit has been omitted and filed separately with the commission.  Confidential treatment has been requestedwith respect the omitted portions.**

 

 

 

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ASSET PURCHASE AGREEMENT

 

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By and Among

 

HYUNDAI SYSCOMM, INC.

 

3R INC.

 

DR. SEONG IK JANG

 

and

 

UTSTARCOM, INC.

 

Dated as ofFebruary 26, 2004

 

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TABLE OF CONTENTS

 

 
| ARTICLE I                                                                                         |
|---------------------------------------------------------------------------------------------------|
|                                                                                              |
| DEFINITIONS                                                                                       |
|                                                                                              |
| SECTION  1.01. Certain Defined Terms                                                              |
| SECTION  1.02. Definitions                                                                        |
|                                                                                              |
| ARTICLE II                                                                                        |
|                                                                                              |
| PURCHASE AND SALE                                                                                 |
|                                                                                              |
| SECTION  2.01. Purchase and Sale of Purchased Assets                                              |
| SECTION  2.02. Seller’s Liabilities                                                          |
| SECTION  2.03. Purchase Price; Allocation of Purchase Price                                       |
| SECTION  2.04. Closing                                                                            |
| SECTION  2.05. Closing Deliveries by the Seller                                                   |
| SECTION  2.06. Closing Deliveries by the Purchaser                                                |
| SECTION  2.07. Holdback.                                                                          |
|                                                                                              |
| ARTICLE III                                                                                       |
|                                                                                              |
| REPRESENTATIONS AND WARRANTIES OF  THE SELLER                                                     |
|                                                                                              |
| SECTION  3.01. Organization, Authority and Qualification of the Seller                            |
| SECTION  3.02. No Conflict                                                                        |
| SECTION  3.03. Governmental Consents and Approvals                                                |
| SECTION  3.04. Financial Information; Books and Records                                           |
| SECTION  3.05. Absence of Undisclosed Liabilities                                                 |
| SECTION  3.06. Acquired Assets                                                                    |
| SECTION  3.07. Conduct in the Ordinary Course; Absence of Certain Changes, Events and  Conditions |
| SECTION  3.08. Litigation                                                                         |
| SECTION  3.09. Compliance with Laws                                                               |
| SECTION  3.10. Environmental and Other Permits and Licenses; Related Matters                      |
| SECTION  3.11. Material Contracts                                                                 |
| SECTION  3.12. Intellectual Property                                                              |
| SECTION  3.13. Tangible Personal Property                                                         |
| SECTION  3.14. Purchased Assets                                                                   |
| SECTION  3.15. Employee Benefit Matters                                                           |
| SECTION  3.16. Labor Matters                                                                      |
| SECTION  3.17. Employees                                                                          |
| SECTION  3.18. Taxes                                                                              |

 

i

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| SECTION  3.19. Insurance                                                 |
|--------------------------------------------------------------------------|
| SECTION  3.20. Full Disclosure                                           |
| SECTION  3.21. Brokers                                                   |
| SECTION  3.22. Preferences; Solvency                                     |
| SECTION  3.23. Principal Creditors                                       |
| SECTION  3.24. Accounts Receivable                                       |
| SECTION  3.25. Accounts Payable                                          |
| SECTION  3.26. Competition                                               |
| SECTION  3.27. Fair Price                                                |
| SECTION  3.28. Board Approval                                            |
| SECTION  3.29. Past Due Obligations                                      |
| SECTION  3.30. Availability of Documents                                 |
| SECTION  3.31. Disclaimer of the Seller                                  |
|                                                                     |
| ARTICLE IV                                                               |
|                                                                     |
| REPRESENTATIONS AND  WARRANTIES OF THE PURCHASER                         |
|                                                                     |
| SECTION  4.01. Organization and Authority of the Purchaser               |
| SECTION  4.02. No Conflict                                               |
| SECTION  4.03. Governmental Consents and Approvals                       |
| SECTION  4.04. Brokers                                                   |
| SECTION  4.05. Funds                                                     |
|                                                                     |
| ARTICLE V                                                                |
|                                                                     |
| ADDITIONAL AGREEMENTS                                                    |
|                                                                     |
| SECTION  5.01. Conduct of Business                                       |
| SECTION  5.02. Access to Information                                     |
| SECTION  5.03. Confidentiality                                           |
| SECTION  5.04. Regulatory and Other Authorizations; Notices and Consents |
| SECTION  5.05. Notice of Developments                                    |
| SECTION  5.06. No Solicitation or Negotiation                            |
| SECTION  5.07. Use of Intellectual Property                              |
| SECTION  5.08. Non-Competition                                           |
| SECTION  5.09. Training Services                                         |
| SECTION  5.10. Manufacturing Agreement                                   |
| SECTION  5.11. Distributorship Agreement                                 |
| SECTION  5.12. Further Action with Respect to Purchased Assets           |
| SECTION  5.13. Intellectual Property License Agreement                   |
| SECTION  5.14. Transition Services                                       |
| SECTION  5.15. Further Action                                            |
| SECTION  5.16. 2003 Audited Financial Statements                         |

 

ii

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| ARTICLE VI                                                    |
|---------------------------------------------------------------|
|                                                          |
| EMPLOYEE MATTERS                                              |
|                                                          |
| SECTION  6.01. Key Employees                                  |
| SECTION  6.02. Required Filings                               |
|                                                          |
| ARTICLE VII                                                   |
|                                                          |
| TAX MATTERS                                                   |
|                                                          |
| SECTION  7.01. Tax Cooperation and Exchange of Information    |
| SECTION  7.02. Conveyance Taxes                               |
|                                                          |
| ARTICLE VIII                                                  |
|                                                          |
| CONDITIONS TO CLOSING                                         |
|                                                          |
| SECTION  8.01. Conditions to Obligations of the Seller        |
| SECTION  8.02. Conditions to Obligations of the Purchaser     |
|                                                          |
| ARTICLE IX                                                    |
|                                                          |
| INDEMNIFICATION                                               |
|                                                          |
| SECTION  9.01. Survival of Representations and Warranties     |
| SECTION  9.02. Indemnification by the Seller, 3R and Dr. Jang |
| SECTION  9.03. Indemnification by the Purchaser               |
| SECTION  9.04. Notice of Loss; Third Party Claims             |
| SECTION  9.05. Limitations on Liability                       |
| SECTION  9.06. Exclusivity                                    |
| SECTION  9.07. Knowing Fraud                                  |
| SECTION  9.08. Tax Treatment                                  |
|                                                          |
| ARTICLE X                                                     |
|                                                          |
| TERMINATION,  AMENDMENT AND WAIVER                            |
|                                                          |
| SECTION  10.01. Termination                                   |
| SECTION  10.02. Effect of Termination                         |
| SECTION  10.03. Amendment                                     |
| SECTION  10.04. Waiver                                        |
|                                                          |
| ARTICLE XI                                                    |
|                                                          |
| GENERAL PROVISIONS                                            |
|                                                          |
| SECTION  11.01. Expenses                                      |

 

iii

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| SECTION  11.02. Notices                                       |
|---------------------------------------------------------------|
| SECTION  11.03. Public Announcements                          |
| SECTION  11.04. Severability                                  |
| SECTION  11.05. Entire Agreement                              |
| SECTION  11.06. Assignment                                    |
| SECTION  11.07. No Third Party Beneficiaries                  |
| SECTION  11.08. Governing Law                                 |
| SECTION  11.09. Dispute Resolution                            |
| SECTION  11.10. Headings                                      |
| SECTION  11.11. Counterparts                                  |
| SECTION  11.12. Interpretation and Rules of Construction |

 

iv

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EXHIBITS

 
| A            |   | List  of Principal Creditors                            |
|--------------|--------|---------------------------------------------------------|
|         |   |                                                    |
| B            |   | Form of  Creditor Consent                          |
|         |   |                                                    |
| C            |   | Form of  Intellectual Property License Agreement   |
|         |   |                                                    |
| 2.05(a)(i)   |   | Form of Bill of Sale and  Assignment               |
|         |   |                                                    |
| 2.05(a)(ii)  |   | Form of Assignment of  Owned Intellectual Property |
|         |   |                                                    |
| 2.05(a)(iii) |   | Form of Assumption Agreement                            |

 

v

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DISCLOSURE SCHEDULE

 

The Disclosure Schedule shall include thefollowing Sections:

 
| 3.03    |   | Governmental  Consents and Approvals                                               |
|---------|--------|------------------------------------------------------------------------------------|
|    |   |                                                                               |
| 3.05    |   | Absence of  Undisclosed Liabilities                                                |
|    |   |                                                                               |
| 3.07    |   | Conduct in  the Ordinary Course; Absence of Certain Changes, Events and Conditions |
|    |   |                                                                               |
| 3.08    |   | Litigation                                                                         |
|    |   |                                                                               |
| 3.11    |   | Material  Contracts                                                                |
|    |   |                                                                               |
| 3.12    |   | Intellectual  Property                                                             |
|    |   |                                                                               |
| 3.13    |   | Tangible  Personal Property                                                        |
|    |   |                                                                               |
| 3.14    |   | Purchased  Assets                                                                  |
|    |   |                                                                               |
| 3.16    |   | Labor  Matters                                                                     |
|    |   |                                                                               |
| 3.17    |   | Employees                                                                          |
|    |   |                                                                               |
| 3.18    |   | Taxes                                                                              |
|    |   |                                                                               |
| 3.24    |   | Accounts  Receivable                                                               |
|    |   |                                                                               |
| 3.29    |   | Past Due  Obligations                                                              |
|    |   |                                                                               |
| 5.01(b) |   | Conduct of  Business                                                               |
|    |   |                                                                               |
| 5.04(c) |   | Regulatory  and Other Authorizations; Notices and Consents                         |
|    |   |                                                                               |
| 5.08    |   | Non-Competition                                                                    |
|    |   |                                                                               |
| 6.01    |   | Key  Employees                                                                     |

 

vi

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This ASSET PURCHASE AGREEMENT (this “Agreement”),dated as of February 26, 2004, by and among HYUNDAI SYSCOMM, INC., acorporation organized and existing under the Laws of Korea (the “Seller”),3R INC., a corporation organized and existing under the Laws of Korea (“3R”),DR. SEONG-IK JANG (“Dr. Jang”), and UTSTARCOM, INC., a Delawarecorporation (the ”Purchaser”).

 

WHEREAS, the Seller, directly and through BrainTechnology Industries Company Ltd., a corporation organized and existing underthe laws of Korea (“BTI”), is engaged in the business of manufacturingand selling wireless telecommunication equipment, software, systems and relatedproducts (the ”Business”);

 

WHEREAS, the Seller wishes to sell to the Purchaser(or to one or more Affiliates of the Purchaser designated by the Purchaser),and the Purchaser (through the Purchaser or any such Affiliate of thePurchaser) wishes to purchase from the Seller, certain assets of the Seller,all upon the terms and subject to the conditions set forth herein;

 

WHEREAS, the Purchaser and BTI have entered into anagreement dated as of today (the “BTI Agreement”) pursuant to which BTIwishes to sell certain tangible personal property of BTI (the “BTI Assets”)to the Purchaser (or to its designee) and the Purchaser (or its designee) wishesto purchase such property from BTI, all upon the terms and subject to theconditions set forth therein;

 

WHEREAS, the Seller has facilitated, or willfacilitate, the hiring of certain of the Seller’s employees by the Purchaser orits designated Affiliate on or prior to the Closing Date;

 

WHEREAS, the Board of Directors of the Seller hasdetermined that this Agreement and the transactions contemplated hereby are inthe best interests of the Seller, its shareholders and its creditors;

 

WHEREAS, the shareholders of the Seller with requisitevoting power have duly approved the transactions contemplated in thisAgreement;

 

WHEREAS, it is a condition to the consummation of thetransactions contemplated hereby that each of the creditors of the Seller setforth in Exhibit A (the ”Principal Creditors”) executeand deliver the creditor consent (the ”Creditor Consent”)substantially in the form set forth in Exhibit B to each of theSeller and the Purchaser;

 

WHEREAS, concurrently with the consummation of thetransactions contemplated hereby, the Purchaser and/or one or more of itsAffiliates and the Seller will enter into an Intellectual Property LicenseAgreement (the ”Intellectual Property License Agreement”)substantially in the form attached hereto as Exhibit C, pursuant towhich, among other things, the Purchaser and/or one or more of its Affiliatesare willing to license to the Seller certain Intellectual Property assetspurchased by the Purchaser (through the Purchaser or one or more Affiliates ofthe Purchaser designated by the Purchaser) pursuant to this Agreement, upon theterms and subject to the conditions set forth in the Intellectual PropertyLicense Agreement; and

 

WHEREAS, 3R and Dr. Jang are direct or indirectstockholders of the Seller.

 

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NOW, THEREFORE, in consideration of the promises andthe mutual agreements and covenants hereinafter set forth, and intending to belegally bound, the Seller, 3R and Dr. Jang and the Purchaser hereby agreeas follows:

 

# ARTICLE IDEFINITIONS

#  

SECTION 1.01.  Certain Defined Terms.  For purposes of this Agreement:

 

“Acquisition Documents” means this Agreement,the Ancillary Agreements and any certificate delivered pursuant to thisAgreement or the transactions contemplated by this Agreement.

 

“Action” means any claim, action, suit,arbitration, inquiry, proceeding or investigation by or before any GovernmentalAuthority.

 

“Affiliate” means, with respect to anyspecified Person, any other Person that directly, or indirectly through one ormore intermediaries, controls, is controlled by, or is under common controlwith, such specified Person; with respect to the Seller, such other Personshall include Dr. Jang and 3R.

 

“Business Day” means any day that is not aSaturday, a Sunday, a holiday or other day on which banks are required orauthorized by Law to be closed in The City of New York or Seoul, Korea.

 

“Claims” means any and all administrative,regulatory or judicial actions, suits, petitions, appeals, demands, demandletters, claims, liens, notices of noncompliance or violation, investigations,proceedings, consent orders or consent agreements.

 

“Code” means the Internal Revenue Code of 1986,as amended through the date hereof.

 

“control” (including the terms “controlledby” and “under common control with”), with respect to therelationship between or among two or more Persons, means the possession,directly or indirectly or as trustee, personal representative or executor, ofthe power to direct or cause the direction of the affairs or management of aPerson, whether through the ownership of voting securities, as trustee,personal representative or executor, by contract, credit arrangement orotherwise.

 

“Conveyance Taxes” means all sales, use, valueadded, transfer, stamp, stock transfer, real property transfer or capital gainsand similar Taxes.

 

“Copyrights” means mask works, rights ofpublicity and privacy, and copyrights in works of authorship of any type,including Software, registrations and applications for registration thereofthroughout the world, all rights therein provided by international treaties andconventions, all moral and common law rights thereto, and all other rightsassociated therewith.

 

2

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“Disclosure Schedule” means the DisclosureSchedule attached hereto, dated as of the date hereof, delivered by theSeller to the Purchaser in connection with this Agreement.

 

“due inquiry”, as used in this Agreement and asit pertains to the Seller, means inquiring about the  knowledge of the Seller’s Affiliates.

 

“Encumbrance” means any security interest(including *yang do tambo*),pledge, hypothecation, mortgage (including *kun*mortgage), lien (including environmental and tax liens), violation, charge,lease, license, encumbrance, servient easement, adverse claim, reversion,reverter, preferential arrangement, restrictive covenant, condition orrestriction of any kind, including any restriction on the use, voting,transfer, receipt of income or other exercise of any attributes of ownership.

 

“Environment” means surface waters,groundwaters, soil, subsurface strata and ambient air.

 

“Environmental Claims” means any Claimsrelating in any way to any Environmental Law or any Environmental Permit,including (a) any and all Claims by Governmental Authorities forenforcement, cleanup, removal, response, remedial or other actions or damagespursuant to any applicable Environmental Law and (b) any and all Claims byany Person seeking damages, contribution, indemnification, cost recovery,compensation or injunctive relief resulting from Hazardous Materials or arisingfrom alleged injury or threat of injury to health, safety or the Environment.

 

“Environmental Laws” means all Laws, now orhereafter in effect and as amended, and any judicial or administrativeinterpretation thereof, including any judicial or administrative order, consentdecree or judgment, relating to the environment, health, safety, naturalresources or Hazardous Materials.

 

“Environmental Permits” means all permits,approvals, identification numbers, licenses and other authorizations requiredunder or issued pursuant to any applicable Environmental Law.

 

“Governmental Authority” means any federal,national, supranational, state, provincial, local, or similar government,governmental, regulatory or administrative authority, agency or commission orany court, tribunal, or judicial or arbitral body.

 

“Governmental Order” means any order, writ,judgment, injunction, decree, stipulation, determination or award entered by orwith any Governmental Authority.

 

“Hazardous Materials” means (a) petroleumand petroleum products, radioactive materials, asbestos-containing materials,urea formaldehyde foam insulation, transformers or other equipment that containpolychlorinated biphenyls and radon gas, (b) any other chemicals, materialsor substances defined as or included in the definition of “hazardoussubstances”, “hazardous wastes”, “hazardous materials”, “extremely hazardouswastes”, “restricted hazardous wastes”, “toxic substances”, “toxic pollutants”,“contaminants” or “pollutants”, or words of similar import, under anyapplicable Environmental Law, and (c) any other chemical, material orsubstance which is regulated by any Environmental Law.

 

3

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“Indebtedness” means, with respect to anyPerson, (a) all indebtedness of such Person, whether or not contingent,for borrowed money, (b) all obligations of such Person for the deferredpurchase price of property or services over an initial period of 180 days ormore, (c) all obligations of such Person evidenced by notes, bonds,debentures or other similar instruments, (d) all indebtedness created orarising under any conditional sale or other title retention agreement withrespect to property acquired by such Person (even though the rights andremedies of the seller or lender under such agreement in the event of defaultare limited to repossession or sale of such property), (e) all obligationsof such Person as lessee under leases that have been or should be, inaccordance with Korean GAAP, recorded as capital leases, (f) allobligations, contingent or otherwise, of such Person under acceptance, letterof credit or similar facilities, (g) all obligations of such Person topurchase, redeem, retire, defease or otherwise acquire for value any capitalstock of such Person or any warrants, rights or options to acquire such capitalstock, valued, in the case of redeemable preferred stock, at the greater of itsvoluntary or involuntary liquidation preference plus accrued and unpaiddividends, (h) all Indebtedness of others referred to in clauses (a)through (g) above guaranteed directly or indirectly in any manner by suchPerson, or in effect guaranteed directly or indirectly by such Person throughan agreement (i) to pay or purchase such Indebtedness or to advance orsupply funds for the payment or purchase of such Indebtedness, (ii) topurchase, sell or lease (as lessee or lessor) property, or to purchase or sellservices, primarily for the purpose of enabling the debtor to make payment ofsuch Indebtedness or to assure the holder of such Indebtedness against loss,(iii) to supply funds to or in any other manner invest in the debtor(including any agreement to pay for property or services irrespective ofwhether such property is received or such services are rendered) or(iv) otherwise to assure a creditor against loss, and (i) allIndebtedness referred to in clauses (a) through (g) above secured by (orfor which the holder of such Indebtedness has an existing right, contingent or otherwise,to be secured by) any Encumbrance on property (including accounts and contractrights) owned by such Person, even though such Person has not assumed or becomeliable for the payment of such Indebtedness.

 

“Indemnified Party” means a PurchaserIndemnified Party or a Seller Indemnified Party, as the case may be.

 

“Indemnifying Party” means the Seller pursuantto Section 9.02 and the Purchaser pursuant to Section 9.03, as thecase may be.

 

“Intellectual Property” means (a) Patents,(b) Trademarks, (c) Copyrights, (d) Trade Secrets and(e) Software.

 

“IP Agreements” means (a) licenses ofOwned Intellectual Property from the Seller to third parties other than withrespect to systems sold by the Seller, (b) licenses of IntellectualProperty (other than Trademarks and the Retained Trade Secrets) from thirdparties to the Seller, (c) agreements between the Seller and third partiesrelating to the development or use of Intellectual Property (other thanTrademarks and the Retained Trade Secrets), and (d) consents, settlements,decrees, orders, injunctions, judgments or rulings governing the use, validityor enforceability of Owned Intellectual Property.

 

“Korea” means the Republic of Korea.

 

4

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“Korean GAAP” means generally acceptedaccounting principles and practices in Korea in effect from time to timeapplied consistently throughout the periods involved.

 

“Law” means any foreign, federal, national,supranational, state, provincial, local or similar statute, law, ordinance, regulation,rule, code, order, requirement or rule of law (including common law and the lawof Korea).

 

“Liabilities” means any and all debts,liabilities and obligations, whether accrued or fixed, absolute or contingent,matured or unmatured or determined or determinable, including those arisingunder any Law (including any Environmental Law), Action or Governmental Orderand those arising under any contract, agreement, arrangement, commitment orundertaking.

 

“Licensed Intellectual Property” meansIntellectual Property (other than Trademarks and the Retained Trade Secrets)licensed to the Seller pursuant to the IP Agreements.

 

“Material Adverse Effect” means anycircumstance, change in or effect on the Seller, or the Purchased Assets that,individually or in the aggregate with all other circumstances, changes in oreffects on the Seller, or the Purchased Assets:  (a) is or is reasonably likely to be materially adverse tothe continuing business, continuing operations, assets or liabilities(including contingent liabilities), employee relationships, liquidity or thecondition (financial or otherwise) of the Seller, (b) is or is reasonablylikely to be materially adverse to the Seller’s ability to perform itsobligations under this Agreement or any of the Ancillary Agreements, or(c) is reasonably likely to be materially adverse to (i) thePurchased Assets or (ii) the use or intended use of the Purchased Assetsby the Seller or BTI.

 

“Owned Intellectual Property” meansIntellectual Property (other than Trademarks and the Retained Trade Secrets)owned by the Seller.

 

“Patents” means United States, foreign andinternational patents, patent applications, utility models, utility modelapplications, designs, design applications and statutory inventionregistrations, including reissues, divisions, continuations, continuations-in-part,extensions and reexaminations thereof, and all rights therein provided byinternational treaties and conventions.

 

“Permitted Encumbrances” means such of thefollowing as to which no enforcement, collection, execution, levy orforeclosure proceeding shall have been commenced and as to which the Seller isnot otherwise subject to civil or criminal liability due to its existence:  Encumbrances imposed by Law, such asmaterialmen’s, mechanics’, carriers’, workmen’s and repairmen’s liens and othersimilar liens arising in the ordinary course of business securing obligationsthat (i) are not overdue for a period of more than 30 days and(ii) are not in excess of 50,000,000 Korean Won in the aggregate at anytime.

 

“Person” means any individual, partnership,firm, corporation, limited liability company, association, trust,unincorporated organization or other entity; for purposes of this Agreement,two or more individuals or entities acting as a partnership, syndicate or groupfor the purpose of acquiring, holding or disposing of securities of an issuershall be deemed to be a ”Person”.

 

5

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“Reference Balance Sheet Date” means the dateof the latest audited balance sheet included in the Financial Statements.

 

“Release” means disposing, discharging,injecting, spilling, leaking, leaching, dumping, emitting, escaping, emptying,seeping, placing and the like into or upon any land or water or air or otherwiseentering into the Environment.

 

“Retained Trade Secrets” means Trade Secretswhich are (i) financial and tax records of the Seller and(ii) employment records of the Seller.

 

“Seller’s Software” means all Software owned bythe Seller.

 

“Software” means computer software, programsand databases in any form, including source code, object code, operatingsystems and specifications, data, databases, database management code,utilities, graphical user interfaces, menus, images, icons, forms, methods ofprocessing, software engines, platforms, and data formats, all versions,updates, corrections, enhancements and modifications thereof, and all relateddocumentation, developer notes, comments and annotations.

 

“subsidiaries” of a Person means any and allcorporations, partnerships, limited liability companies, joint ventures,associations and other entities in which such Person holds, directly orindirectly, through one or more intermediaries, whether through the ownershipof voting securities, as trustee, personal representative or executor, bycontract, credit arrangement or otherwise, (i) the ability to designate amajority of the directors or other Persons performing similar functions, or(ii) a majority of the economic equity interest.

 

“Tax” or “Taxes” means any and alltaxes, fees, levies, duties, tariffs, imposts, and other charges of any kind(together with any and all interest, penalties, additions to tax and additionalamounts imposed with respect thereto) imposed by any government or taxingauthority, including taxes or other charges on or with respect to income,franchises, windfall or other profits, gross receipts, property, sales, use,capital stock, payroll, employment, social security, workers’ compensation,unemployment compensation, or net worth; taxes or other charges in the natureof excise, withholding, ad valorem, stamp, transfer, value added, or gainstaxes; license, registration and documentation fees; and customs’ duties,tariffs, and similar charges.

 

“Tax Returns” means any return, declaration,report, election, claim for refund or information return or other statement orform filed or required to be filed with any Tax authority relating to Taxes,including any schedule or attachment thereto, and including any amendmentthereof.

 

“Trade Secrets” means trade secrets, know-howand other confidential or proprietary technical, business and otherinformation, including inventions (whether or not patentable or reduced topractice) and improvements thereto, manufacturing and production processes andtechniques, research and development information, technology, drawings,specifications, designs, plans, proposals, technical data, financial, marketingand business data, pricing and cost information, business and marketing plans,customer and supplier lists and information, and all rights in any jurisdictionto limit the use or disclosure thereof.

 

6

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“Trademarks” means trademarks, service marks,trade dress, logos, trade names, corporate names, URL addresses, domain namesand symbols, slogans and other indicia of source or origin, including thegoodwill of the business symbolized thereby or associated therewith, common lawrights thereto, registrations and applications for registration thereofthroughout the world, all rights therein provided by international treaties andconventions, and all other rights associated therewith.

 

“Transferred IP Agreements” means the IPAgreements other than (i) those agreements to be set forth in writing by thePurchaser prior to the Closing and (ii) those commercial off-the-shelf softwarelicenses to be mutually agreed upon by the Seller and the Purchaser.

 

SECTION 1.02.  Definitions.  The following terms have the meanings setforth in the Sections set forth below:

 
| **Definition**                                       |   | **Location** |
|------------------------------------------------------|--------|--------------|
|                                                 |   |         |
| “3R”                                       |   | Preamble     |
| “Agreement”                                |   | Preamble     |
| “Allocation”                               |   | 2.03(c)      |
| “Ancillary  Agreements”                    |   | 2.05(a)      |
| “Assignment of Owned  Intellectual Property     |   | 2.05(a)      |
| “Assumed Liabilities”                      |   | 2.02         |
| “Assumption  Agreement”                    |   | 2.05(a)      |
| “Audited Financial  Statements”            |   | 3.04(a)      |
| “Bill of Sale”                             |   | 2.05(a)      |
| “BTI”                                      |   | Recitals     |
| “BTI Agreement”                            |   | Recitals     |
| “BTI Assets”                               |   | Recitals     |
| “Business”                                 |   | Recitals     |
| “Closing”                                  |   | 2.04         |
| “Closing Date”                             |   | 2.04(b)      |
| “Contingent Payment  Condition”            |   | 2.03(b)      |
| “Creditor Consent”                         |   | Recitals     |
| “Distributorship  Agreement”               |   | 5.11         |
| “Dr. Jang”                                 |   | Preamble     |
| “Financial  Statements”                    |   | 3.04(a)      |
| “FTL”                                      |   | 3.26         |
| “Holdback Amount”                          |   | 2.03(a)(iii) |
| “Insolvency Event”                         |   | 3.22         |
| “Insolvency Statute”                       |   | 3.22         |
| “Intellectual  Property License Agreement” |   | Recitals     |
| “Key Employees”                            |   | 6.01(a)      |

 

7

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| **Definition**                             |   | **Location** |
|--------------------------------------------|--------|--------------|
|                                       |   |         |
| “KFTC”                           |   | 3.26         |
| “Loss”                           |   | 9.02         |
| “Manufacturing  Agreement”       |   | 5.10         |
| “Material Contracts”             |   | 3.11(a)      |
| “Multiemployer Plan”             |   | 3.15         |
| “Multiple Employer  Plan”        |   | 3.15         |
| “Outstanding Claims”             |   | 2.07(b)(ii)  |
| “Principal Creditors”            |   | Recitals     |
| “Purchase Price”                 |   | 2.03(a)      |
| “Purchased Assets”               |   | 2.01(a)      |
| “Purchaser”                      |   | Preamble     |
| “Purchaser  Indemnified Party”   |   | 9.02         |
| “Reserve Amount”                 |   | 2.07(b)(ii)  |
| “Restricted Period”              |   | 5.08(a)      |
| “Seller”                         |   | Preamble     |
| “Seller Indemnified  Party”      |   | 9.03         |
| “Tangible Personal  Property”    |   | 3.13(a)      |
| “Third Party Claim”              |   | 9.04(b)      |
| “Training Agreement”             |   | 5.09         |
| “Transition Services  Agreement” |   | 5.14         |
| “Unaudited Balance  Sheet”       |   | 3.04(a)      |
|                                       |   |         |

#  

# ARTICLE IIPURCHASE AND SALE

#  

SECTION 2.01.  Purchase and Sale of Purchased Assets.  (a) Upon the terms and subject to the conditions of this Agreement, at theClosing, the Seller shall sell, assign, transfer, convey and deliver, or causeto be sold, assigned, transferred, conveyed and delivered, to the Purchaser (orto one or more Affiliates of the Purchaser designated by the Purchaser at orprior to Closing), and the Purchaser shall (or shall cause one or moreAffiliates of the Purchaser designated by the Purchaser at or prior to theClosing to) purchase from the Seller and, with respect to the BTI Assets, BTIthe following assets and properties of the Seller or BTI (the ”PurchasedAssets”):

 

##### (i)            all of the Seller’sright, title and interest in, to and under the Owned Intellectual Property(including Patents claiming any Trade Secrets existing as of the Closing Date)and the Transferred IP Agreements, copies and tangible embodiments thereof inwhatever form or medium, and all rights to sue and recover damages for past,present and future infringement, dilution, misappropriation, violation,unlawful imitation or breach thereof;

 

8

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##### (ii)           all Claims, causesof action, choices in action, rights of recovery and rights of setoff of anykind (including rights to insurance proceeds and rights under and pursuant toall warranties, representations and guarantees made by suppliers of products,materials, or equipment, or components thereof), related to the OwnedIntellectual Property and the Transferred IP Agreements;

#####  

##### (iii)          all literature andgraphical or written expressions, in whatever form, related to the OwnedIntellectual Property, including technical documentation, user manuals, anddevelopment documentation;

#####  

##### (iv)          such equipment,machinery, furniture, fixtures and other tangible personal property owned bythe Seller or BTI to be set forth in writing by the Purchaser on or prior tothe Closing; provided, however, that the Seller and the Purchasershall negotiate in good faith with respect to such tangible personal propertythat the Seller or BTI reasonably requires to conduct the Business in Koreaafter the Closing;

#####  

##### (v)           to the extenttransferable under applicable law, the military service exemptions applicableto any employees of the Seller who are hired by the Purchaser pursuant to thisAgreement; and

#####  

##### (vi)          to the extenttransferable, any franchises, permits, licenses, agreements, waivers andauthorizations of any Governmental Authority held or used by the Seller or BTIin connection with any items listed in clause (i), (ii), (iii), (iv) or(v) of this Section 2.01; provided, however, that withrespect to such franchises, permits, licenses, agreements, waivers orauthorizations that the Seller or BTI reasonably requires to conduct theBusiness in Korea after the Closing, the Seller and the Purchaser shallnegotiate in good faith with respect to which franchises, permits, licenses,agreements, waivers and authorizations shall be retained by the Seller or BTI.

#####  

### (b)           Notwithstandinganything in Section 2.01(a) to the contrary, the Seller shall retain, andthe Purchaser shall not purchase from the Seller, any of the assets andproperties owned by the Seller, other than the Purchased Assets.

###  

SECTION 2.02.  Seller’s Liabilities.  At the Closing, the Purchaser shall assumeand become responsible for paying, performing and discharging all obligationsarising after the Closing (i) under the Transferred IP Agreements and(ii) in connection with or related to any claims made by Motorola Inc.against the Purchaser or its Affiliates with respect to products sold, orservices provided, by the Purchaser or its Affiliates using the PurchasedAssets after the Closing; provided, however, that the Purchaseris not assuming any liabilities in connection with or related to any claimsmade by Motorola Inc. or any other third party with respect to products sold,or services provided by (i) any Person using the Purchased Assets on orbefore the Closing or (ii) the Seller using the license under the IntellectualProperty License Agreement on or after the Closing (collectively, the “AssumedLiabilities”).  Notwithstandinganything to the contrary contained herein, the Seller shall retain, and shallbe responsible for paying, performing and discharging all of the Seller’sLiabilities when due, and neither the Purchaser nor any of its Affiliates shallassume or have any responsibility for, any of the Liabilities of the Sellerother than the Assumed Liabilities.

 

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SECTION 2.03.  Purchase Price; Allocation of PurchasePrice.  (a)  The purchase price for the Purchased Assetsand for the performance by the Seller, 3R and Dr. Jang under this Agreement(including, without limitation, the covenants contained in Section 5.08)(the ”Purchase Price”) shall consist of and be payable as follows:

 

##### (i)            On the ClosingDate, the Purchaser shall pay to the Seller (subject to Section 2.03(d)) anamount equal to U.S. $[***] less the amount, if any, to be paid to BTI inconsideration for the tangible personal assets, if any, to be purchased by thePurchaser pursuant to the BTI Agreement, provided, however, that,if the aggregate depreciated book value of the Purchased Assets described inSection 2.01(a)(iv), as reflected on the Seller’s or BTI’s balance sheet,as the case may be, as of the Closing Date (to be prepared by the Seller andBTI on or prior to the Closing Date in accordance with Korean GAAP on a basisconsistent with the past practices of the Seller or BTI, as the case may be,and converted into U.S. Dollars at then-prevailing exchange rates),exceeds U.S. $1,500,000, then the Purchaser shall pay to the Seller, atthe Closing, an additional amount equal to the amount by which the aggregatedepreciated book value of the Purchased Assets described inSection 2.01(a)(iv) exceeds U.S. $1,500,000; it being agreed andunderstood that, if the Seller or BTI, as the case may be, in good faith isunable to prepare such balance sheets on or before the Closing, the partiesshall in good faith agree upon a reasonable estimate of such depreciated bookvalue for purposes of the Closing and shall confirm such depreciated book valueand, if necessary, reconcile any additional payment as soon as practicableafter the Closing; and

#####  

##### (ii)           The Purchaser shallretain U.S. $[***] (the ”Holdback Amount”) and, pursuant toSection 2.07, shall pay the Seller (subject to Section 2.03(d)) a portion orall of such amount on such dates as specified in Section 2.07.

#####  

### (b)           The Purchaser shallpay, on or before 180 days after the Closing Date, to the Seller (subject toSection 2.03(d)) U.S. $[***] if and only if the Contingent PaymentCondition is satisfied on or before 5:00 p.m. (Seoul, Korea time) on thedate [***] from the Closing Date.  Forpurposes of this Agreement, the ”Contingent Payment Condition”shall be satisfied at such time as [***].

###  

### (c)           The Purchase Priceset forth in Section 2.03(a)(i), and (ii) shall be allocated among thePurchased Assets and the covenants contained in Section 5.08 as of theClosing Date in accordance with an allocation to be mutually agreed upon beforethe Closing (the ”Allocation”). For all Tax purposes, the Purchaser and the Seller agree to report thetransactions contemplated in this Agreement in a manner consistent with theterms of this Agreement, including the Allocation, and that neither the Sellernor the Purchaser shall take any position inconsistent therewith in any TaxReturn, in any refund claim, in any litigation, or otherwise.

###  

### (d)           Any and all paymentsmade to the Seller pursuant to Section 2.03(a)(i), 2.03(a)(ii) or 2.03(b)shall be used promptly by the Seller to pay obligations owed to creditors ofthe Seller; prior to any payments to the Seller pursuant toSections 2.03(a)(i), 2.03(a)(ii) or 2.03(b), the Seller shall present tothe Purchaser for approval, which approval shall not be unreasonably withheldor delayed, a list of such creditors and the amounts to be paid to each

 

10

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### such creditor, provided that part orall of the payments pursuant to Sections 2.03(a)(i) shall first be used topay each Key Employee who has accepted the Purchaser’s offer of employment anyand all amounts (to the extent not already paid), including salary and bonuses,owed by the Seller or its Affiliates to such Key Employees through the ClosingDate; provided, further, that the Purchaser may pay suchcreditors or Key Employees directly instead of making any such payments to theSeller and any and all such payments to such creditors or Key Employees will becredited towards the Purchase Price.

###  

SECTION 2.04.  Closing.  Subject to the terms and conditions of this Agreement, the saleand purchase of the Purchased Assets contemplated by this Agreement shall takeplace at a closing (the ”Closing”) to be held at the offices ofShearman & Sterling LLP, 1080 Marsh Road, Menlo Park, California 94025at 10:00 A.M. California time on the later to occur of(a) March 31, 2004; provided, however, that thePurchaser may, with a prior written notice to the Seller on or prior to March31, 2004, designate any date within 15 days from March 31, 2004 as the earliestday of Closing, or (b) the fifth Business Day following the satisfactionor waiver of all conditions to the obligations of the parties set forth inArticle VIII, or at such other place or at such other time or on suchother date as the parties hereto may mutually agree upon in writing (the day onwhich the Closing takes place being the ”Closing Date”).

 

SECTION 2.05.  Closing Deliveries by the Seller.  At the Closing, the Seller shall deliver orcause to be delivered to the Purchaser:

 

#### (a)           a bill of salesubstantially in the form of Exhibit 2.05(a)(i) (the ”Billof Sale”), an assignment of Owned Intellectual Property substantially inthe form of Exhibit 2.05(a)(ii) (the ”Assignment of OwnedIntellectual Property”) and an assumption agreement substantially in theform of Exhibit 2.05(a)(iii) (the “Assumption Agreement,”and together with the Bill of Sale, the Assignment of Owned IntellectualProperty, the Intellectual Property License Agreement, the Training Agreement, theManufacturing Agreement, the Distribution Agreement and the Transition ServicesAgreement, the ”Ancillary Agreements”), executed counterparts ofeach of the Ancillary Agreements and such other instruments, in form andsubstance reasonably satisfactory to the Purchaser, as may be reasonablyrequested by the Purchaser to transfer the Purchased Assets to the Purchaser orto evidence such transfer on the public records;

####  

#### (b)           a true and completecopy, certified by a representative director of the Seller of the resolutionsduly and validly adopted by the Board of Directors and the shareholders of theSeller evidencing their authorization of the execution and delivery of thisAgreement and the Ancillary Agreements and the consummation of the transactionscontemplated hereby and thereby;

####  

#### (c)           certificates of therepresentative directors of the Seller certifying the names and signatures ofthe officers of the Seller authorized to sign this Agreement and the AncillaryAgreements and the other documents to be delivered hereunder and thereunder;

####  

#### (d)           the opinions,certificates and other documents required to be delivered pursuant toSection 8.02; and

 

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#### (e)           receipt for thePurchase Price less the Holdback Amount.

####  

SECTION 2.06.  Closing Deliveries by the Purchaser.  At the Closing, the Purchaser shall deliverto the Seller:

 

#### (a)           a true and completecopy, certified by an officer of the Purchaser, of the resolutions duly andvalidly adopted by the Board of Directors of the Purchaser evidencing itsauthorization of the execution and delivery of this Agreement and the AncillaryAgreements and the consummation of the transactions contemplated hereby andthereby;

####  

#### (b)           certificates ofofficers of the Purchaser certifying the names and signatures of the officersof the Purchaser authorized to sign this Agreement and the Ancillary Agreementsand the other documents to be delivered hereunder and thereunder;

####  

#### (c)           opinion,certificates and other documents required to be delivered pursuant toSection 8.01;

####  

#### (d)           the executedcounterpart of the Assumption Agreement; and

####  

#### (e)           the Purchase Priceless the Holdback Amount.

####  

## SECTION 2.07.  Holdback.

##  

### (a)           At the Closing, thePurchaser shall retain the Holdback Amount, and, subject to Article IX,has the right, to pay for and/or settle by offsetting against the HoldbackAmount any Loss suffered or incurred by any Purchaser Indemnified Party(including any Action brought or otherwise initiated by any PurchaserIndemnified Party), arising out of or resulting from clause (a), (b), (c)or (d) of Section 9.02.

###  

(b)           Onthe fifth Business Day after the first anniversary of the Closing Date, thePurchaser shall transfer to the Seller (subject to Section 2.03(d)) an amountin cash equal to the Holdback Amount less the sum of:

 

##### (i)            the aggregate ofall Losses incurred or suffered by any Purchaser Indemnified Party inaccordance with Section 2.07(a) and Article IX prior to such date;and

#####  

##### (ii)           the aggregate ofsuch Purchaser Indemnified Party’s good faith estimate (the ”ReserveAmount”) of the total Losses that could be incurred or suffered (the ”OutstandingClaims”) by such Purchaser Indemnified Party in accordance withSection 2.07(a) and Article IX, and specified in a notice to be givenpursuant to Section 9.04; provided, however, that suchnotice shall be given at or prior to the time the cash specified inSection 2.07(b) is transferred.

#####  

(c)           Uponthe settlement of all Outstanding Claims, the Purchaser shall transfer to theSeller (subject to Section 2.03(d)) the Reserve Amount less all Losses incurredor suffered in accordance with Article IX with respect to the OutstandingClaims.

 

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# ARTICLE IIIREPRESENTATIONS AND WARRANTIESOF THE SELLER

#  

As an inducement to the Purchaser to enter into thisAgreement, the Seller, 3R and Dr. Jang, jointly and severally, hereby representand warrant to the Purchaser as follows:

 

SECTION 3.01.  Organization, Authority and Qualificationof the Seller.  (a) Each of theSeller and 3R is a corporation duly organized, validly existing and in goodstanding under the laws of the jurisdiction of its incorporation and has allnecessary power and authority to enter into this Agreement and any AncillaryAgreements to which it is a party, to carry out its obligations hereunder andthereunder and to consummate the transactions contemplated hereby andthereby.  The Seller is duly licensed orqualified to do business and is in good standing in each jurisdiction which theproperties owned or leased by it or the operation of its business makes suchlicensing or qualification necessary, except where the failure to be solicensed or qualified would not have a Material Adverse Effect.  The execution and delivery of this Agreementand the Ancillary Agreements to which it is a party by each of the Seller and3R, the performance by each of the Seller and 3R of its obligations hereunderand thereunder and the consummation by each of the Seller and 3R of thetransactions contemplated hereby and thereby have been duly authorized by allrequisite action on the part of the Seller and its shareholders and 3R, as thecase may be.  This Agreement has been,and upon their execution the Ancillary Agreements to which it is a party shallhave been, duly executed and delivered by each of the Seller, 3R and Dr. Jangand (assuming due authorization, execution and delivery by the Purchaser) thisAgreement constitutes, and upon their execution the Ancillary Agreements towhich it is a party shall constitute, legal, valid and binding obligations ofthe Seller, 3R and Dr. Jang enforceable against the Seller, 3R and Dr. Jang inaccordance with their respective terms. Dr. Jang has full capacity, right, power and authority to enter intothis Agreement.

 

(b)           TheSeller has no subsidiaries.

 

SECTION 3.02.  No Conflict.  Assuming the obtaining of the approvalsreferred to in Sections 4.03, 8.01(e), 8.01(f), and 8.02(j), except as mayresult from any facts or circumstances related solely to the Purchaser, the execution,delivery and performance of this Agreement and the Ancillary Agreements towhich it is a party by the Seller does not and will not (a) violate,conflict with or result in the breach of any provision of the articles ofincorporation (or similar organizational documents) of the Seller,(b) conflict with or violate (or cause an event which could have aMaterial Adverse Effect as a result of) any Law or Governmental Orderapplicable to the Seller, or any of its assets, properties or businesses, whichconflict or violation would have a Material Adverse Effect, (c) conflictwith, result in any breach of, constitute a default (or event which with thegiving of notice or lapse of time, or both, would become a default) under,require any consent under, or give to others any rights of termination,amendment, acceleration, suspension, revocation or cancellation of, any note,bond, mortgage or indenture, contract, agreement, lease, sublease, license,permit, franchise or other instrument or arrangement to which the Seller is aparty, which conflict, breach, default, absence of consent or

 

13

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rights, all asreferred to in this clause (c), relates to the Purchased Assets or wouldotherwise have a Material Adverse Effect, or (d) conflict with, result inany breach of, constitute a default (or event which with the giving of noticeor lapse of time, or both, would become a default) under, require any consentunder, or give to others any rights of termination, amendment, acceleration,suspension, revocation or cancellation of, or result in the creation of anyEncumbrance on any of the Purchased Assets pursuant to, any note, bond,mortgage or indenture, contract, agreement, lease, sublease, license, permit,franchise or other instrument or arrangement by which any of the PurchasedAssets is bound or affected.

 

SECTION 3.03.  Governmental Consents and Approvals.  The execution, delivery and performance ofthis Agreement and each Ancillary Agreement to which it is a party by theSeller do not and will not require any consent, approval, authorization orother order of, action by, filing with or notification to, any GovernmentalAuthority, except as described in Section 3.03 of the Disclosure Schedule.  The Seller has obtained all permits,licenses and authorizations and other approvals of all Governmental Authoritiesrequired for the Seller and BTI toengage in the Business, all of which (i) are valid and in fullforce and effect and (ii) are either assignable to the Purchaser or can bereadily obtained by the Purchaser upon application, other than those permits,licenses, authorizations and other approvals which, if not obtained, would nothave a Material Adverse Effect.

 

SECTION 3.04.  Financial Information; Books and Records.  (a) True and complete copies of the audited balance sheet of the Seller asof December 31, 2001, the audited balance sheet of the Seller as ofDecember 31, 2002, and the audited statements of income, retainedearnings, stockholders’ equity and changes in financial position of the Sellerfor the period from inception to December 31, 2002, together with all relatednotes and schedules thereto, accompanied by the reports thereon of the Seller’sindependent accountants (collectively referred to herein as the “AuditedFinancial Statements”) and true and complete copies of the unauditedbalance sheet of the Seller for the year ended as ofDecember 31, 2003 (the “Unaudited Balance Sheet,” and togetherwith the Audited Financial Statements, the ”Financial Statements”)have been delivered by the Seller to the Purchaser.  The Audited Financial Statements (i) were prepared inaccordance with the books of account and other financial records of the Seller,(ii) present fairly the financial condition and results of operations ofthe Seller as of the dates thereof or for the periods covered thereby,(iii) have been prepared in accordance with Korean GAAP applied on a basisconsistent with the past practices of the Seller and (iv) include alladjustments (consisting only of normal recurring accruals) that are necessaryfor a fair presentation of the financial condition of the Seller and theresults of the operations of the Seller as of the dates thereof or for theperiods covered thereby, except where the failure to be so prepared, to sopresent and to so include, all as contemplated by clauses (i) through(iv), would not have a Material Adverse Effect.  The Unaudited Balance Sheet, subject to any audit adjustments,(i) was prepared in accordance with the books of account and other financialrecords of the Seller, (ii) presents fairly the financial condition of theSeller as of the date thereof and (iii) has been prepared in accordance withKorean GAAP applied on a basis consistent with past practices of the Seller,except where the failure to be so prepared and to so present, all ascontemplated by clauses (i) through (iii), would not have a Material AdverseEffect.

 

### (b)           The books of accountand other financial records of the Seller: (i) reflect all items of income and expense and all assets andLiabilities required to be reflected therein in

 

14

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### accordance with Korean GAAP applied on abasis consistent with the past practices of the Seller, (ii) are in allmaterial respects complete and correct, and do not contain or reflect anymaterial inaccuracies or discrepancies and (iii) have been maintained inaccordance with good business and accounting practices.

###  

SECTION 3.05.  Absence of Undisclosed Liabilities.  There are no material Liabilities of theSeller of the kind which are recorded as liabilities in a balance sheetprepared in accordance with Korean GAAP other than (i) Liabilities as ofJanuary 31, 2004, set forth in Section 3.05 of the DisclosureSchedule and (ii) Liabilities incurred sinceJanuary 31, 2004 in the ordinary course of business which do not havea Material Adverse Effect.  Except asset forth in Section 3.05 of the Disclosure Schedule, to the Seller’s bestknowledge, there are no Liabilities which are likely to be asserted against theSeller and, if asserted, to have a Material Adverse Effect.

 

SECTION 3.06.  Acquired Assets.  Since the Reference Balance Sheet Date, allthe Purchased Assets have been acquired for consideration not less than thefair market value of such Purchased Assets at the date of such acquisition.

 

SECTION 3.07.  Conduct in the Ordinary Course; Absenceof Certain Changes, Events and Conditions. Since the Reference Balance Sheet Date (or with respect toSections 3.07(b) and 3.07(d), September 30, 2003), except as set forth inSection 3.07 of the Disclosure Schedule, the Seller has conducted itsbusiness in the ordinary course and consistent with past practice.  As amplification and not limitation of theforegoing, except as set forth in Section 3.07 of the Disclosure Schedule,since the Reference Balance Sheet Date, the Seller has not:

 

#### (a)           permitted or allowedany of the Purchased Assets to be subjected to any Encumbrance, other thanPermitted Encumbrances and Encumbrances that will be released at or prior tothe Closing;

####  

#### (b)           except in theordinary course of business consistent with past practice, discharged orotherwise obtained the release of any Encumbrance, or paid or otherwisedischarged any Liability, other than current liabilities reflected on thelatest balance sheet in the Financial Statements and current liabilitiesincurred in the ordinary course of business consistent with past practice sinceSeptember 30, 2003;

####  

#### (c)           amended, terminated,cancelled or compromised any material claims or waived any other rights whichconstitute a portion of the Purchased Assets;

####  

#### (d)           sold, transferred,leased, subleased, licensed or otherwise disposed of any Purchased Assets sinceSeptember 30, 2003;

####  

#### (e)           incurred anyIndebtedness in excess of 50,000,000 Korean Won individually or 100,000,000Korean Won in the aggregate;

####  

#### (f)            made any loan to,guaranteed any Indebtedness of or otherwise incurred any Indebtedness on behalfof any Person, in each case, in excess of 50,000,000 Korean Won in theaggregate;

 

15

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#### (g)           (i) granted anyincrease, or announced any increase, in the wages, salaries, compensation,bonuses, incentives, pension or other benefits payable by the Seller to any ofits employees, including any increase or change pursuant to any employee plan,or (ii) established or increased or promised to increase any benefitsunder any employee plan, in either case except in the ordinary course ofbusiness or as required by Law or any collective bargaining agreement;

####  

#### (h)           entered into anyagreement, arrangement or transaction related to the Purchased Assets with anyof its directors, officers, employees or stockholders (or with any relative,beneficiary, spouse or Affiliate of such Persons);

####  

#### (i)            disclosed any secretor confidential Intellectual Property (except by way of issuance of a patent orin accordance with the terms of a confidentiality agreement);

####  

#### (j)            (i) abandoned,permitted to lapse, sold, assigned, or granted any security interest in or toany item of the Owned Intellectual Property, Licensed Intellectual Property orIP Agreements, (ii) failed to perform or cause to be performed allapplicable filings, recordings and other acts, and pay or caused to be paid allrequired fees and taxes, to maintain and protect its interest in each item ofOwned Intellectual Property, Licensed Intellectual Property and IP Agreements,other than any such failure which would not have a Material Adverse Effect, (iii) granted to any third party(other than customers in the ordinary course of business) any license withrespect to any Owned Intellectual Property or Licensed Intellectual Property or(iv) developed, created orinvented any Intellectual Property jointly with any third party;

####  

#### (k)           suffered anyMaterial Adverse Effect;

####  

#### (l)            agreed, whether inwriting or otherwise, to take any of the actions specified in thisSection 3.07 or granted any options to purchase, rights of first refusal,rights of first offer or any other similar rights or commitments with respectto any of the actions specified in this Section 3.07, except as expresslycontemplated by this Agreement and the Ancillary Agreements;

####  

#### (m)          entered into anytransaction, other than in the ordinary course and consistent with pastpractice or where the consummation of such transaction would not have aMaterial Adverse Effect;

####  

#### (n)           terminated theemployment of any KeyEmployee;

####  

#### (o)           changedits accounting methods or practices (including, without limitation, any changein depreciation or amortization policies or rates) in any material respect;

####  

#### (p)           madeany capital expenditures exceeding 50,000,000 Korean Won for a single item orgroup of related items;

####  

#### (q)           incurredany destruction of, damage to or loss of any asset, business or customer(whether or not covered by insurance) that resulted, or could reasonably beexpected to result, in losses of more than 50,000,000 Korean Won in theaggregate;

 

16

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#### (r)            authorized any write-off (as uncollectible)of any note or accounts receivable in excess of 50,000,000 Korean Won in theaggregate except in the ordinary course and consistent with past practice andin accordance with Korean GAAP;

####  

#### (s)           settled, or agreedto settle, any action, suit or proceeding relating to the Business or thePurchased Assets; or

####  

#### (t)            incurred anyMaterial Adverse Effect in the relationships with its key customers, suppliers,vendors and agents or other key business partners.

####  

SECTION 3.08.  Litigation.  Except as set forth in Section 3.08 of the Disclosure Schedule (which,with respect to each Action set forth therein, sets forth the parties, natureof the proceeding, date and method commenced, amount of charges or other reliefsought and, if applicable, paid or granted), there are no Actions by or againstthe Seller or affecting any of the Purchased Assets pending before anyGovernmental Authority (or, to the best knowledge of the Seller, threatened tobe brought by or before any Governmental Authority).  None of the matters set forth in Section 3.08 of the DisclosureSchedule has or has had a Material Adverse Effect or could affect thelegality, validity or enforceability of this Agreement, any Ancillary Agreementor the consummation of the transactions contemplated hereby or thereby.  Except as set forth in Section 3.08 ofthe Disclosure Schedule, neither the Seller nor any of the Purchased Assets issubject to any Governmental Order (nor, to the best knowledge of the Seller,are there any such Governmental Orders threatened to be imposed by any GovernmentalAuthority) which has or has had a Material Adverse Effect or could affect thelegality, validity or enforceability of this Agreement, any Ancillary Agreementor the consummation of the transactions contemplated hereby or thereby.

 

SECTION 3.09.  Compliance with Laws.  (a) The Seller has conducted and continues to conduct the Business inaccordance with all Laws and Governmental Orders applicable to the Seller orany of its properties or assets, including the Purchased Assets, and the Selleris not in violation, and has not been in violation during the last three years,of any such Law or Governmental Order, other than, in each case, anynoncompliance which does not have and is not reasonably likely to have aMaterial Adverse Effect.

 

### (b)           No Governmental Orderapplicable to the Seller or any of the Purchased Assets has or has had aMaterial Adverse Effect or could affect the legality, validity orenforceability of this Agreement, any Ancillary Agreement or the consummationof the transactions contemplated hereby or thereby.

###  

SECTION 3.10.  Environmental and Other Permits andLicenses; Related Matters.  Exceptwhere the failure of a representation contained herein would not have aMaterial Adverse Effect:

 

#### (a)           the Seller is incompliance with all applicable Environmental Laws and all Environmental Permitsand all such Environmental Permits are valid and in full force and effect forthe conduct of the Business and where applicable, timely renewal applicationshave been submitted for all such authorizations and permits;

 

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#### (b)           there has been noRelease or threatened Release of any Hazardous Material on, under, or from anyof the Seller’s real property or, during the period of the Seller’s ownership,lease, use or occupancy thereof, on any property formerly owned, leased, usedor occupied by the Seller;

####  

#### (c)           there are noEnvironmental Claims pending or threatened against the Seller, and there are nocircumstances that can reasonably be expected to form the basis of any suchEnvironmental Claim; the Business is and for the past three years has beenconducted in compliance with all applicable Environmental Laws; and during thepast three years, the Seller has not received any written notice regarding(i) any actual or alleged violation of any Environmental Law or(ii) any liabilities or potential liabilities (whether accrued, absolute,contingent, unliquidated or otherwise), including any investigatory, remedialor corrective obligations, relating to the Seller or its facilities arisingunder any Environmental Law; and

####  

#### (d)           the Seller has noactual or alleged liability, whether fixed or contingent, under anyEnvironmental Law.

####  

SECTION 3.11.  Material Contracts.  (a) Section 3.11(a) of the Disclosure Schedule lists each of thefollowing contracts and agreements (including, without limitation, oralagreements and informal arrangements) of the Seller (such contracts andagreements, together with all IP Agreements set forth inSection 3.12(a) of the Disclosure Schedule, being “Material Contracts”):

 

##### (i)            all contracts andagreements relating to Indebtedness of the Seller in excess of 50,000,000Korean Won;

#####  

##### (ii)           all contracts andagreements with any Governmental Authority to which the Seller is a party;

#####  

##### (iii)          all contracts andagreements between or among the Seller and/or any Affiliate of the Seller;

#####  

##### (iv)          all employmentcontract, written or oral, with any executive officer or director of theSeller;

#####  

##### (v)           allcontracts and agreements relating to restrictions on competition of the Selleror any of its employees;

#####  

##### (vi)          alljoint venture contracts or arrangements or other arrangements involving sharingof profits;

#####  

##### (vii)         allagreements relating to the disposition or acquisition of assets or any interestin any business enterprise other than those entered into in the ordinary courseand consistent with past practice; and

#####  

##### (viii)        all other contractsand agreements, whether or not made in the ordinary course of business, theabsence of which would have a Material Adverse Effect.

 

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### (b)           Except as otherwisenoted in Section 3.11(b) of the Disclosure Schedule, (i) each IP Agreementis valid and binding on the parties thereto and is in full force and effect andrepresents the entire agreement between the parties with respect to the subjectmatter thereof; (ii) each Transferred IP Agreement is freely and fullyassignable to the Purchaser without penalty, impairment or other adverseconsequences; and (iii) each Transferred IP Agreement, upon consummationof the transactions contemplated by this Agreement and the AncillaryAgreements, shall continue in full force and effect without penalty, impairmentor other adverse consequence.  TheSeller is not in material breach of, or default under, any IP Agreementand no event has occurred that, with notice or lapse of time, would constitutea material breach or default or permit termination or modification of such IPAgreement.  To the best knowledge of theSeller after due inquiry, there is no material dispute concerning any IPAgreement regarding the scope of such agreement, or performance under suchagreement including with respect to any payments to be made or received bySeller thereunder.

###  

### (c)           The Seller has madeavailable to the Purchaser true and complete copies of all Material Contracts.

###  

### (d)           Except as set forthon Section 3.11(d) of the Disclosure Schedule, there is no contract,agreement or other arrangement granting any Person any preferential right topurchase any of the Purchased Assets.

###  

### (e)           Except as set forthin Section 3.11(e) of the Disclosure Schedule and except where thefailure of a representation contained herein would not have a Material AdverseEffect, (i) the Seller is not in default under any Material Contracts, and,to the best knowledge of the Seller, no other party is in default under any ofthe Material Contracts; (ii) there is no outstanding notice ofcancellation or termination in connection with any Material Contracts; and(iii) each of the Material Contracts is a valid and binding obligation ofthe Seller and each of the other parties to such Material Contract and is infull force and effect in accordance with its terms.

###  

SECTION 3.12.  Intellectual Property.  (a) Section 3.12(a) of the Disclosure Schedule sets forth a trueand complete list of (i) all patents and patent applications, registeredcopyrights (including computer software programs and mask works) and copyrightapplications included in the Owned Intellectual Property; (ii) all IPAgreements; and (iii) all other Owned Intellectual Property and LicensedIntellectual Property material to the Business.

 

### (b)           To the bestknowledge of the Seller after due inquiry, the operation of the Business ascurrently conducted or as contemplated to be conducted and the use of the OwnedIntellectual Property and Licensed Intellectual Property in connectiontherewith do not conflict with, infringe, misappropriate or otherwise violatethe Intellectual Property or other proprietary rights, including rights ofprivacy, publicity and endorsement, of any third party, and no Actions orClaims are pending or, to the best knowledge of the Seller after due inquiry,threatened against the Seller alleging any of the foregoing, except as setforth in Section 3.12(b) of the Disclosure Schedule.

###  

### (c)           Except as disclosedin Section 3.12(c) of the Disclosure Schedule, the Seller is the exclusiveowner of the entire and unencumbered right, title and interest in and to theOwned Intellectual Property, and to the best knowledge of the Seller after dueinquiry, the Seller has a

 

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### valid right to use the Owned IntellectualProperty and Licensed Intellectual Property in the ordinary course of theBusiness as presently conducted or as contemplated to be conducted subject onlyto the terms of IP Agreements in the case of Licensed IntellectualProperty.  Except as disclosed inSection 3.12(c) of the Disclosure Schedule, the Seller is the applicant orassignee of record in all applications and owner of record in all registrationsset forth in Section 3.12(a) of the Disclosure Schedule, and noopposition, extension of time to oppose, interference, rejection, or refusal toregister has been received by the Seller or any of its Affiliates in connectionwith any such application.

###  

### (d)           No OwnedIntellectual Property or, to the best knowledge of the Seller after dueinquiry, any Licensed Intellectual Property, is subject to any outstandingdecree, order, injunction, judgment or ruling restricting the use of suchIntellectual Property or that would impair the validity or enforceability ofsuch Intellectual Property.

###  

### (e)           The OwnedIntellectual Property and the Licensed Intellectual Property include all of theIntellectual Property (other than Trademarks and the Retained Trade Secrets)used in the ordinary day-to-day conduct of the Business, and thereare no other items of Intellectual Property (other than Trademarks and theRetained Trade Secrets) that are material to the ordinary day-to-dayconduct of the Business.  The Sellerdoes not use any material Intellectual Property owned or licensed by anyAffiliate of the Seller.  The OwnedIntellectual Property and, to the best knowledge of the Seller after dueinquiry, the Licensed Intellectual Property are subsisting, valid andenforceable, and have not been adjudged invalid or unenforceable in whole orpart.

###  

### (f)            Except as disclosedin Section 3.12(f) of the Disclosure Schedule, no Actions or Claims havebeen asserted or are pending or, to the best knowledge of the Seller after dueinquiry, threatened against the Seller (i) based upon or challenging orseeking to deny or restrict the use by the Seller of any of the OwnedIntellectual Property or Licensed Intellectual Property; (ii) allegingthat any services provided by, processes used by, or products manufactured orsold by the Seller infringe or misappropriate any Intellectual Property rightof any third party; or (iii) alleging that the Licensed IntellectualProperty is being licensed or sublicensed in conflict with the terms of anylicense or other agreement.

###  

### (g)           To the bestknowledge of the Seller after due inquiry, no Person is engaging in anyactivity that infringes the Owned Intellectual Property or the LicensedIntellectual Property.  Except asdisclosed in Section 3.12(g) of the Disclosure Schedule, the Seller hasnot granted any license or other right to any third party with respect to theOwned Intellectual Property or the Licensed Intellectual Property.  Assuming the obtaining of all approvalsreferred to in Sections 4.03, 8.01(e), 8.01(f) and 8.02(j) theconsummation of the transactions contemplated by this Agreement and theAncillary Agreements will not result in the impairment of any of the OwnedIntellectual Property or the Licensed Intellectual Property.

###  

### (h)           The Seller’sSoftware does not incorporate any GNU or “open” source code or object codeunder which the Seller’s Software is subject to the GNU general public license,GNU lesser general public license and other “copyleft” license.  The Seller has obtained all approvals, tothe extent necessary for its Business, for exporting the Seller’s Softwareoutside Korea and importing the Seller’s Software into any country in which theSeller’s Software is now sold or

 

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### licensed for use, and all such export andimport approvals in the United States and throughout the world are valid,current, outstanding and in full force and effect.  No rights in the Seller’s Software have been transferred to anythird party except through customer licenses granted in the ordinary course ofbusiness.  The Seller has the right touse all software development tools, library functions, compilers, and otherthird party software that are material to the Business or that are required tooperate or modify the Seller’s Software.

###  

### (i)            The Seller hastaken reasonable steps in accordance with normal industry practice to maintainthe confidentiality of the trade secrets and other confidential IntellectualProperty used in connection with the Business. Except as disclosed in Section 3.12(i) of the Disclosure Schedule,to the best knowledge of the Seller (i) there has been no misappropriationof any material trade secrets or other material confidential IntellectualProperty used in connection with the Business by any Person; (ii) noemployee, independent contractor or agent of the Seller has misappropriated anytrade secrets of any other Person in the course of performance as an employee,independent contractor or agent of the Seller; and (iii) no employee,independent contractor or agent of the Seller is in default or breach of anyterm of any employment agreement, nondisclosure agreement, assignment ofinvention agreement or similar agreement or contract relating in any way to theprotection, ownership, development, use or transfer of Intellectual Property.

###  

### (j)            All current andpast technical employees, contractors and consultants of the Seller haveassigned to the Seller all inventions, designs and works made by them duringsuch employment with the Seller and are under written obligation to continue toassign all inventions, designs and works made by them during such employmentwith the Seller.

###  

SECTION 3.13.  Tangible Personal Property.  (a) Section 3.13(a) of the Disclosure Schedule lists each item ordistinct group of machinery, equipment, tools, supplies, furniture, fixtures,personalty, vehicles and other tangible personal property (the ”TangiblePersonal Property”) used in the Business as of the dates set forth inSection 3.13(a) of the Disclosure Schedule.

 

### (b)           Section 3.13(b)of the Disclosure Schedule sets forth a true and complete list of allleases and subleases for Tangible Personal Property and any and all materialancillary documents pertaining thereto (including all amendments, consents andevidence of commencement dates and expiration dates).

###  

### (c)           The Seller or BTIhas the full right to exercise any renewal options contained in the leases andsubleases pertaining to the Tangible Personal Property on the terms andconditions contained therein and upon due exercise would be entitled to enjoythe use of each item of leased Tangible Personal Property for the full term ofsuch renewal options.

###  

SECTION 3.14.  Purchased Assets.  (a) Except as disclosed in Section 3.14 of the Disclosure Schedule, theSeller or BTI owns, leases or has the legal right to use, sell, transfer andassign all right, title and interest in and to all the Purchased Assets,including the Owned Intellectual Property, the Licensed Intellectual Propertyand Transferred IP Agreements.  Exceptas set forth in Section 3.14 of the Disclosure Schedule, the Seller or BTIhas good and marketable title to, or, in the case of leased or subleasedPurchased Assets, valid and subsisting

 

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leaseholdinterests in, all the Purchased Assets, free and clear of all Encumbrances,except Permitted Encumbrances.  BTI doesnot own any of the Owned Intellectual Property, the Licensed IntellectualProperty and Transferred IP Agreements.

 

### (b)           The Purchased Assetsconstitute all the Intellectual Property (other than Trademarks and theRetained Trade Secrets) forming a part of, used, held or intended to be usedin, and all the Intellectual Property (other than Trademarks and the RetainedTrade Secrets) necessary in the conduct of, the Business.  The Seller and BTI have caused the PurchasedAssets described in Section 2.01(iv) to be maintained in accordance withgood business practice, and all such Purchased Assets are in good operatingcondition, subject to typical wear and tear, and repair and are suitable forthe purposes for which they are used by the Seller or BTI.

###  

### (c)           Assuming theobtaining of the approval referred to in Sections 4.03, 8.01(e), 8.01(f)and 8.02(j), the Seller and BTI have the complete and unrestricted power andunqualified right to sell, assign, transfer, convey and deliver the PurchasedAssets to the Purchaser without penalty or other adverse consequences.  Following the consummation of the transactionscontemplated by this Agreement and the BTI Agreement and the execution of theinstruments of transfer contemplated by this Agreement, the Purchaser will own,with good, valid and marketable title, or lease, under valid and subsistingleases, or otherwise acquire the interests of the Seller and BTI in thePurchased Assets, free and clear of any Encumbrances, other than PermittedEncumbrances, and without incurring any penalty or other adverse consequence,including any increase in rentals, royalties, or license or other fees imposedas a result of, or arising from, the consummation of the transactionscontemplated by this Agreement.

###  

SECTION 3.15.  Employee Benefit Matters.  Neither the Seller nor any entity that is(or at any relevant time was) a member of a ”controlled group of corporations”with or under “common control” (as defined in Section 414(b), (c), (m) or(o) of the Code) with the Seller sponsors, maintains, contributes to or has anobligation to contribute to, or has sponsored, maintained, contributed to orhad an obligation to contribute to, any “pension plan” (as defined inSection 3(2) of ERISA) that is (or was at any relevant time) subject toTitle IV of ERISA, any “multiemployer plan” (as defined inSection 3(37) of ERISA) (a ”Multiemployer Plan”) or a singleemployer pension plan (within the meaning of Section 4001(a)(15) of ERISA)for which the Seller could incur liability under Section 4063 or 4064 ofERISA (a ”Multiple Employer Plan”).  The Seller has not incurred any liability under, arising out of,or by operation of, Title IV of ERISA (other than liability for premiumsto the Pension Benefit Guaranty Corporation arising in the ordinary course),including any liability in connection with (i) the termination orreorganization of any employee benefit plan subject to Title IV of ERISAor (ii) the withdrawal from any Multiemployer Plan or Multiple EmployerPlan, and no fact or event exists that could give rise to any such liability.

 

SECTION 3.16.  Labor Matters.  Except as disclosed in Section 3.16 ofthe Disclosure Schedule, (a)  the Seller is not a party to any collectivebargaining agreement or other labor union contract applicable to personsemployed by the Seller in connection with the Business, and currently there areno organizational campaigns, petitions or other unionization activities seekingrecognition of a collective bargaining unit which could affect the Business;(b) there are no controversies, strikes, slowdowns or work stoppagespending or, to the best knowledge of the Seller, threatened between the Sellerand any of its employees employed in

 

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connection withthe Business, and the Seller has not experienced any such controversy, strike,slowdown or work stoppage within the past three years; (c)  the Seller hasnot breached or otherwise failed to comply with the provisions of anycollective bargaining or union contract applicable to persons employed by theSeller in connection with the Business, and there are no grievances outstandingagainst the Seller under any such agreement or contract which could have aMaterial Adverse Effect; (d) the Seller is currently in compliance withall applicable Laws relating to the employment of persons employed by theSeller in connection with the Business, including those related to wages,hours, collective bargaining and the payment and withholding of taxes and othersums as required by the appropriate Governmental Authority; (e) there isno unfair labor practice claim or complaint against the Seller pending or, tothe best knowledge of the Seller, threatened before any Governmental Authority;and (f) there has not been any Material Adverse Effect, and the Sellerdoes not believe that there will be any Material Adverse Effect, as a result ofthe impact of the transactions contemplated hereunder upon the Seller’srelations with its employees.

 

SECTION 3.17.  Employees.  (a)  Section 3.17 ofthe Disclosure Schedule lists the current annual salary rates and bonusesof each current salaried employee, officer or consultant of the Seller.

 

### (b)           All directors,officers, management employees, and technical and professional employees of theSeller are under written obligation to the Seller to maintain in confidence allconfidential or proprietary information acquired by them in the course of theiremployment and to assign to the Seller all inventions made by them within thescope of their employment during such employment and for a reasonable periodthereafter.

###  

SECTION 3.18.  Taxes.  Except as disclosed in Section 3.18 of the Disclosure Scheduleand subject to any exceptions that would not have a Material Adverse Effect,(a) all Tax Returns required to be filed by or with respect to the Seller,the Purchased Assets or the Business (including any consolidated, combined orunitary Tax Return that includes the Seller) have been timely filed;(b) all Taxes required to be shown on such Tax Returns or otherwise due byor with respect to the Seller, the Purchased Assets or the Business have beentimely paid; (c) all such Tax Returns (insofar as they relate to theSeller, the Purchased Assets or the Business) are true, correct and complete inall material respects; (d) no adjustment relating to such Tax Returns hasbeen proposed formally or informally by any Governmental Authority (insofar as eitherrelates to the Seller, the Purchased Assets or the Business or could result inliability of the Seller on the basis of joint and/or several liability) and, tothe knowledge of the Seller, no basis exists for any such adjustment;(e) there are no pending or, to the knowledge of the Seller, threatenedactions or proceedings for the assessment or collection of Taxes against theSeller, BTI, the Purchased Assets or the Business or any Person that wasincluded in the filing of a Tax Return with the Seller on a consolidated,combined or unitary basis; (f) thereare no Tax liens on any of the Purchased Assets; (g)  the Seller has notreceived any notice or inquiry from any jurisdiction where the Seller does notcurrently file Tax Returns to the effect that such filings may be required withrespect to the Business or that the Business may otherwise be subject totaxation by such jurisdiction; (h) the Seller has properly and timelywithheld, collected or deposited all amounts required to be withheld, collectedor deposited in respect of Taxes; (i) thereare no Tax investigations, inquiries or audits by any Tax authority in progressrelating to the Purchased Assets or the Business, nor has the Seller receivedany written notice indicating

 

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that a Governmental Authority intends to conduct such an audit orinvestigation; and (j)  the Seller has not been audited by any relevant Taxauthority or any other Governmental Authority, domestic or foreign, withrespect to any Taxes or Tax Returns.

 

SECTION 3.19.  Insurance.  All material assets, properties and risks of the Seller,including the Purchased Assets, are, and for the past three years have been,covered by valid and, except for insurance policies that have expired undertheir terms in the ordinary course, currently effective insurance policies orbinders of insurance (including general liability insurance, property insuranceand workers’ compensation insurance) issued in favor of the Seller withresponsible insurance companies, in such types and amounts and covering suchrisks as are consistent with customary practices and standards of companiesengaged in businesses and operations similar to those of the Seller.

 

SECTION 3.20.  Full Disclosure.  (a) The Seller is not aware of any facts pertaining to (i) the Seller whichis reasonably likely to have a Material Adverse Effect or (ii) the PurchasedAssets which could have a Material Adverse Effect, and which have not beendisclosed in this Agreement or the Disclosure Schedule or otherwisedisclosed to the Purchaser by the Seller in writing.

 

### (b)           No representation orwarranty of the Seller in this Agreement, nor any certificate furnished or tobe furnished to the Purchaser pursuant to this Agreement, or in connection withthe transactions contemplated by this Agreement, contains or will contain anyuntrue statement of a material fact, or omits or will omit to state a materialfact necessary to make the statements contained herein or therein notmisleading.

###  

SECTION 3.21.  Brokers.  No broker, finder or investment banker is entitled to anybrokerage, finder’s or other fee or commission in connection with thetransactions contemplated by this Agreement or the Ancillary Agreements basedupon arrangements made by or on behalf of the Seller.

 

SECTION 3.22.  Preferences; Solvency.  (a) The consummation of the transactions contemplated herein are not andwill not be subject to any challenge under any Insolvency Statute or similarLaw, whether as preference, fraudulent conveyance or otherwise; and (b) noInsolvency Event has occurred to the Seller, and the Seller is not aware of anyreason to believe that any Insolvency Event is reasonably likely to occur tothe Seller (i) due to the execution and performance of this Agreement orthe consummation of the transactions contemplated herein; (ii) at or priorto the Closing Date; or (iii) for a period of two years after the ClosingDate.  For the purposes of thisSection 3.22, “Insolvency Event” means with respect to any Person(A) a commencement of a voluntary case concerning such Person under anInsolvency Statute; (B) a commencement of an involuntary case against suchPerson under an Insolvency Statute; (C) an appointment of a custodianunder any applicable Insolvency Statute for, or such custodian is put in chargeof, all or any substantial part of the property of such Person; (D) acommencement of any other proceeding under any reorganization, arrangement,adjustment of debt, relief of debtors, dissolution or similar Law of any jurisdiction,whether now or hereafter in effect relating to such Person is commenced by suchPerson or by any other Person; (E) a Government Order whereby such Personis adjudicated insolvent or bankrupt; (F) any order of relief or otherGovernment Order approving any case or proceeding under

 

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InsolvencyStatute; (G) a general assignment by such Person for the benefit ofcreditors or otherwise a general arrangement by such Person for therestructuring of its liabilities with creditors; (H) a determination thatthe total amount of liabilities of such Person exceeds the total amount of itsassets; (I) a suspension of payment by such Person of its liabilitiesgenerally; or (J) a determination that such Person is unable to pay, orshall be unable to pay, its debts, generally as they become due.  For the purposes of this Section 3.22,“Insolvency Statute” means the Bankruptcy Act of Korea, the CorporateReorganization Act of Korea, the Composition Act of Korea, and the CorporateRestructuring Promotion Act of Korea, or any national, provincial, local,foreign or other insolvency, liquidation, rehabilitation or similar statute orany successor statutes thereto, as in effect from time to time.

 

SECTION 3.23.  Principal Creditors.  Other than the Principal Creditors, there isno other holder of Indebtedness of the Seller that is owed more than100,000,000 Korean Won.

 

SECTION 3.24.  Accounts Receivable.  Except as disclosed in Section 3.24 ofthe Disclosure Schedule, all accounts receivable of the Seller represent salesactually made or services actually performed by the Seller in the ordinarycourse of business, subject to any exceptions as would not, in the aggregate,have a Material Adverse Effect.  Allaccounts receivable have been adequately reserved against bad debts, exceptwhere the failure to so reserve would not have a Material Adverse Effect.  There has been no Material Adverse Effect inthe composition of the accounts receivable in terms of aging.

 

SECTION 3.25.  Accounts Payable.  All accounts payable of the Seller representpurchases of goods actually made or services actually received by the Seller inthe ordinary course of business, subject to any exceptions as would not, in theaggregate, have a Material Adverse Effect.

 

SECTION 3.26.  Competition.  The Seller is not subject to any order of,or any investigation or proceeding pending or, to the best knowledge of theSeller after due inquiry, threatened before, the Korean Fair Trade Commission(the ”KFTC”) or the equivalent Governmental Authority of any otherjurisdiction made under the Monopoly Regulation and Fair Trade Act ofKorea (the ”FTL”) or the equivalent legal requirement of any otherjurisdiction in connection with the Business or any of the Purchased Assets.  The Seller has not received anycommunication or request for information relating to any aspect of the Businessor any of the Purchased Assets, including any official or unofficial request orrecommendation with respect to the pricing of any product manufactured or soldby the Business from the KFTC or any other Governmental Authority.  The Seller is not bound by any restrictivecovenant or other non-competition restriction with respect to any aspect of theBusiness.  No agreement, arrangement orconduct (by omission or otherwise) of the Seller or BTI in connection with theBusiness or any of the Purchased Assets has been, to the best knowledge of theSeller after due inquiry, the subject of any investigation, report or decisionby the KFTC or any other Governmental Authority within a three-year periodprior to the date hereof.

 

SECTION 3.27.  Fair Price.  The Seller has conducted a fair and extensive valuation of thePurchased Assets in which it has determined the Purchase Price to be fair andcommercially reasonable.

 

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SECTION 3.28.  Board Approval.  The Seller’s Board of Directors, byresolution duly adopted by a unanimous vote at a meeting duly called and heldand at which all members were present and voted and not subsequently rescindedor modified in any way, has duly (i) determined that this Agreement andthe transactions contemplated hereby are fair to and in the best interests ofthe Seller, its shareholders and its creditors; (ii) approved this Agreementand the transactions contemplated hereby; and (iii) resolved to recommendthat the shareholders of the Seller approve and adopt this Agreement andapprove the transactions contemplated hereby.

 

SECTION 3.29.  Past Due Obligations.  Section 3.29 of the DisclosureSchedule sets forth all liabilities under Korean GAAP of the Seller thatare past due as of February 15, 2004 and the number of days suchobligations have been past due.

 

SECTION 3.30.  Availability of Documents.  The Seller has delivered, or caused to bedelivered, to the Purchaser copies of all documents listed in the DisclosureSchedule or otherwise referred to herein. Such copies are true and complete and include all amendments,supplements and modifications thereto or waivers currently in effectthereunder.

 

SECTION 3.31.  Disclaimer of the Seller.  Except for the representations andwarranties expressly set forth in this Article III or in certificatesdelivered to the Purchaser pursuant to this Agreement, (i) the Sellermakes no representations or warranties as to the Purchased Assets, ALL OTHERWARRANTIES, INCLUDING ANY IMPLIED OR OTHER WARRANTIES OF MERCHANTABILITY ANDFITNESS FOR A PARTICULAR PURPOSE BEING HEREBY EXPRESSLY DISCLAIMED and(ii) the Purchased Assets will be transferred AS IS, WITH ALL FAULTS.

 

# ARTICLE IVREPRESENTATIONS AND WARRANTIESOF THE PURCHASER

#  

As an inducement to the Seller, 3R and Dr. Jang toenter into this Agreement, the Purchaser hereby represents and warrants to theSeller, 3R and Dr. Jang as follows:

 

SECTION 4.01.  Organization and Authority of thePurchaser.  The Purchaser is acorporation duly organized, validly existing and in good standing under thelaws of the jurisdiction of its incorporation and has all necessary corporatepower and authority to enter into this Agreement and the Ancillary Agreementsto which it is a party, to carry out its obligations hereunder and thereunderand to consummate the transactions contemplated hereby and thereby.  Subject to the approval of the Purchaser’sBoard of Directors contemplated in Section 8.02(m), the execution anddelivery by the Purchaser of this Agreement and the Ancillary Agreements towhich it is a party, the performance by the Purchaser of its obligationshereunder and thereunder and the consummation by the Purchaser of thetransactions contemplated hereby and thereby have been duly authorized by allrequisite corporate action on the part of the Purchaser.  This Agreement has been, and upon theirexecution the Ancillary Agreements to which the Purchaser is a party shall havebeen, duly executed and delivered by the Purchaser, and (assuming dueauthorization, execution and delivery by the Seller) this Agreementconstitutes, and upon their execution the Ancillary Agreements to which thePurchaser is a party shall constitute, legal, valid

 

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and bindingobligations of the Purchaser, enforceable against the Purchaser in accordancewith their respective terms.

 

SECTION 4.02.  No Conflict.  Assuming the making and obtaining of allfilings, notifications, consents, approvals, authorizations and other actionsreferred to in Sections 4.03, 8.02(e) and 8.02(m), except as may resultfrom any facts or circumstances relating solely to the Seller, the execution,delivery and performance by the Purchaser of this Agreement and the AncillaryAgreements to which it is a party do not and will not (a) violate,conflict with or result in the breach of any provision of the certificate ofincorporation or by-laws of the Purchaser, (b) conflict with orviolate any Law or Governmental Order applicable to the Purchaser, whichconflict or violation would have a material adverse effect on the Purchaser orits ability to perform its obligations under this Agreement or any of the AncillaryAgreements to which it is a party, or (c) conflict with, or result in anybreach of, constitute a default (or event which with the giving of notice orlapse of time, or both, would become a default) under, require any consentunder, or give to others any rights of termination, amendment, acceleration,suspension, revocation or cancellation of, any note, bond, mortgage orindenture, contract, agreement, lease, sublease, license, permit, franchise orother instrument or arrangement to which the Purchaser is a party, which wouldadversely affect the ability of the Purchaser to carry out its obligationsunder, and to consummate the transactions contemplated by, this Agreement orthe Ancillary Agreements.

 

SECTION 4.03.  Governmental Consents and Approvals.  The execution, delivery and performance bythe Purchaser of this Agreement and each Ancillary Agreement to which thePurchaser is a party do not and will not require any consent, approval,authorization or other order of, action by, filing with, or notification to anyGovernmental Authority, other than such consent, approval, authorization,order, action, filing or notification that would not adversely affect theability of the Purchaser to carry out its obligations under, and to consummatethe transactions contemplated by, this Agreement or the Ancillary Agreementsand except for (i) the approval from the Korean Fair Trade Commission forthe purchase of the Purchased Assets and (ii) a foreign investment reportunder the Foreign Investment Promotion Law for incorporation of an Affiliate ofthe Purchaser in Korea.

 

SECTION 4.04.  Brokers.  Except for Credit Suisse First Boston LLC, no broker, finderor investment banker is entitled to any brokerage, finder’s or other fee orcommission in connection with the transactions contemplated by this Agreementbased upon arrangements made by or on behalf of the Purchaser.  The Purchaser shall be solely responsiblefor payment of the fees and expenses of Credit Suisse First Boston LLC.

 

SECTION 4.05.  Funds.  On the Closing Date, the Purchaser shall have sufficient cashfunds to pay the Purchase Price due on the Closing Date.

 

# ARTICLE VADDITIONAL AGREEMENTS

#  

SECTION 5.01.  Conduct of Business.  (a) The Seller (A) shall, from the date hereof to the Closing Date,(i) use its best efforts to keep available to the Purchaser the services

 

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of the employeesof the Seller and (ii) not engage in any practice, take any action, failto take any action or enter into any transaction which could cause anyrepresentation or warranty of the Seller to be materially untrue at and as ofthe Closing Date or result in a breach of any covenant made by the Seller inthis Agreement; (B) shall, from the date hereof to the date two years fromthe Closing Date, use its best efforts to use its available cash generated inthe ordinary course of business to pay and discharge the amounts owed by theSeller; and (C) shall not, from the date hereof to the date two years fromthe Closing Date, (i) declare or pay any cash dividend on its stock orrepurchase or redeem shares of its stock (other than in exchange for stock ofthe Seller); (ii) make payments, directly or indirectly, to any Affiliatesof the Seller with respect to debt existing on the date hereof or on theClosing Date in an aggregate amount exceeding U.S. $100,000; or(iii) engage in business other than the Business if doing so wouldmaterially adversely affect the Seller’s ability to perform its obligationsunder this Agreement or the Ancillary Agreements.

 

(b)           Exceptas described in Section 5.01(b) of the Disclosure Schedule, the Sellercovenants and agrees that, between the date hereof and the Closing Date,without the prior written consent of the Purchaser, the Seller will not do anyof the things enumerated in the second sentence of Section 3.07 (includingclauses (a) through (t)thereof).

 

SECTION 5.02.  Access to Information.  (a) From the date hereof until the Closing, upon reasonable notice, theSeller shall cause its officers, directors, employees, agents, representatives,accountants and counsel to: (i) afford the officers, employees, agents, accountants, counsel,financing sources and representatives of the Purchaser reasonable access,during normal business hours and by prearrangement through the Sellers’representative, Baxon Kim, to the offices, properties, plants, other facilitiesand books and records of the Seller and to those officers, directors,employees, agents, accountants and counsel of the Seller and (ii) furnishto the officers, employees, agents, accountants, counsel, financing sources andrepresentatives of the Purchaser such additional financial and operating dataand other information regarding the assets, properties, liabilities andgoodwill of the Seller (or legible copies thereof) as the Purchaser may fromtime to time reasonably request.

 

### (b)           In order tofacilitate the resolution of any claims made by or against or incurred by thePurchaser in connection with the Purchased Assets after the Closing or for anyother reasonable purpose, for a period of seven years following the Closing,the Seller shall (i) retain the books and records which relate to theBusiness and its operations for periods prior to the Closing and which shallnot otherwise have been delivered to the Purchaser and (ii) uponreasonable notice, afford the officers, employees, agents and representativesof the Purchaser reasonable access (including the right to make photocopies, atthe Purchaser’s expense), during normal business hours, to such books and records.

###  

SECTION 5.03.  Confidentiality.  (a) Each of Dr. Jang, 3R and the Seller agrees to, and shall cause itsagents, representatives, Affiliates, employees, officers and directors to:  (i) treat and hold as confidential (andnot disclose or provide access to any Person to) all information relating totrade secrets, processes, patent applications, product development, price,customer and supplier lists, pricing and marketing plans, policies andstrategies, details of client and consultant contracts, operations methods,product development techniques, business acquisition plans, new personnelacquisition plans and all other confidential or proprietary

 

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information withrespect to the Purchased Assets, (ii) in the event that Dr. Jang, 3R orthe Seller or any such agent, representative, Affiliate, employee, officer ordirector becomes legally compelled to disclose any such information, providethe Purchaser with prompt written notice of such requirement so that thePurchaser may seek a protective order or other remedy or waive compliance withthis Section 5.03, (iii) in the event that such protective order orother remedy is not obtained, or the Purchaser waives compliance with thisSection 5.03, furnish only that portion of such confidential informationwhich is legally required to be provided and exercise its best efforts toobtain assurances that confidential treatment will be accorded suchinformation, and (iv) promptly furnish (prior to, at, or as soon as practicablefollowing, the Closing) to the Purchaser any and all copies (in whatever formor medium) of all such confidential information then in the possession of Dr.Jang, 3R or the Seller or any of its agents, representatives, Affiliates,employees, officers and directors and, except as otherwise required by Section5.02(b), destroy any and all additional copies then in the possession of Dr.Jang, 3R or the Seller or any of its agents, representatives, Affiliates,employees, officers and directors of such information and of any analyses,compilations, studies or other documents prepared, in whole or in part, on thebasis thereof; provided, however, that this sentence shall notapply to (i) any information that, at the time of disclosure, is availablepublicly and was not disclosed in breach of this Agreement by Dr. Jang, 3R, theSeller, or their agents, representatives, Affiliates, employees, officers ordirectors or (ii), with respect to the Seller, such information that is allowedto be disclosed pursuant to Section 5 of the Intellectual Property LicenseAgreement if and only if the Intellectual Property License Agreement has notbeen terminated at the time of such disclosure; and providedfurtherthat, with respect to Intellectual Property, specific information shall not bedeemed to be within the foregoing exception merely because it is embraced ingeneral disclosures in the public domain. In addition, with respect to Intellectual Property, any combination of featuresshall not be deemed to be within the foregoing exception merely because theindividual features are in the public domain unless the combination itself andits principle of operation are in the public domain.  Each of Dr. Jang, 3R and the Seller agrees and acknowledges thatremedies at law for any breach of its obligations under this Section 5.03 areinadequate and that in addition thereto the Purchaser shall be entitled to seekequitable relief, including injunction and specific performance, in the eventof any such breach.

 

### (b)           Effective as ofClosing, the obligations of the Purchaser or any of its Affiliates pursuant toany non-disclosure or confidentiality agreement between the Seller, Dr.Jang, 3R on one hand and the Purchaser or any of its Affiliates on the otherhand shall terminate with respect to the Purchased Assets.

###  

SECTION 5.04.  Regulatory and Other Authorizations;Notices and Consents. (a)  Each of the Purchaser and the Seller shall use allreasonable efforts to obtain all authorizations, consents, orders and approvalsof all third parties, including all Governmental Authorities and officials,that may be or become necessary for its execution and delivery of, and theperformance of its obligations pursuant to, this Agreement and the AncillaryAgreements to which it is a party and will cooperate fully with each other inpromptly seeking to obtain all such authorizations, consents, orders andapprovals.

 

### (b)           The Seller shallgive promptly such notices to third parties and use its best efforts to obtainsuch third party consents as the Purchaser may in its sole discretion deemnecessary or desirable in connection with the transactions contemplated by thisAgreement.

 

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### (c)           Except as disclosedin Section 5.04(c) of the Disclosure Schedule, the Seller knows of no reasonwhy all the consents, approvals and authorizations necessary for theconsummation of the transactions contemplated by this Agreement will not bereceived, other than as a result of effects arising solely from actions orinactions of the Purchaser or its Affiliates.

###  

### (d)           Notwithstandinganything to the contrary contained herein, the Seller shall use its bestefforts to obtain the Creditor Consent from each Principal Creditor.  The Seller shall use its best efforts to obtainthe Creditor Consent from any other holder of its Indebtedness that is owedmore than 100,000,000 Korean Won on the Closing Date.

###  

SECTION 5.05.  Notice of Developments.  Prior to the Closing, each of Dr. Jang, 3Rand the Seller shall promptly notify the Purchaser in writing of (a) allevents, circumstances, facts and occurrences known to the Seller, Dr. Jang or3R, as the case may be, arising subsequent to the date hereof which couldresult in any breach of a representation or warranty (if made at and as of suchtime subsequent to the date hereof) or covenant of the Seller, Dr. Jang or 3Rin this Agreement or which could have the effect of making any representationor warranty of the Seller, Dr. Jang or 3R in this Agreement untrue or incorrectin any respect (if made at and as of such time subsequent to the date hereof)and (b) all other material developments affecting the Purchased Assets orcreditor relations or employee relations of the Seller.

 

SECTION 5.06.  No Solicitation or Negotiation.  Each of the Seller, 3R and Dr. Jang agreesthat between the date hereof and the earlier of (a) the Closing and(b) the termination of this Agreement, neither the Seller nor any of itsAffiliates, officers, directors, representatives or agents will (i) solicit,initiate, consider, encourage or accept any other proposals or offers from anyPerson (A) relating to any acquisition or purchase of all or a controllingportion of the capital stock of the Seller or any Purchased Assets, (B) toenter into any merger, consolidation or other business combination with theSeller or (C) to enter into a recapitalization, reorganization or anyother extraordinary business transaction involving or otherwise relating to theSeller without the approval of the Purchaser, which approval shall not beunreasonably withheld or delayed, or (ii) participate in any discussions,conversations, negotiations and other communications regarding, or furnish toany other Person any information with respect to, or otherwise cooperate in anyway, assist or participate in, facilitate or encourage any effort or attempt byany other Person to seek to do any of the foregoing.  Each of the Seller, 3R and Dr. Jang immediately shall cease andcause to be terminated all existing discussions, conversations, negotiationsand other communications with any Persons conducted heretofore with respect toany of the foregoing.  Each of theSeller, 3R and Dr. Jang shall notify the Purchaser promptly if any suchproposal or offer, or any inquiry or other contact with any Person with respectthereto, is made and shall, in any such notice to the Purchaser, indicate inreasonable detail the identity of the Person making such proposal, offer,inquiry or contact and the terms and conditions of such proposal, offer,inquiry or other contact.  The Selleragrees not to, without the prior written consent of the Purchaser, release anyPerson from, or waive any provision of, any confidentiality or standstillagreement to which the Seller is a party.

 

SECTION 5.07.  Use of Intellectual Property.  Except as set forth in the IntellectualProperty License Agreement, from and after the Closing, neither the Seller norany of

 

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its Affiliatesshall use any of the Owned Intellectual Property or any of the LicensedIntellectual Property.

 

SECTION 5.08.  Non-ompetition.  (a) For a period of four years after the Closing (the ”RestrictedPeriod”), none of the Seller, 3R and Dr. Jang shall engage, directly orindirectly, in any business anywhere in the world that manufactures, producesor supplies products or services of the kind manufactured, produced or suppliedby the Business as of the Closing or, without the prior written consent of thePurchaser, directly or indirectly, own an interest in, manage, operate, join,control, lend money or render financial or other assistance to or participatein or be connected with, as an officer, employee, partner, stockholder,consultant or otherwise, any Person that competes with the Purchaser inmanufacturing, producing or supplying products or services of the kindmanufactured, produced or supplied by the Business as of the Closing; provided,however, that the Seller, 3R, Dr. Jang, and any of their respectivesubsidiaries or successors from time to time shall be allowed to engage in suchbusiness in Korea to manufacture, produce or supply such products or servicessolely for use within Korea using the license transferred to the Sellerpursuant to the Intellectual Property License Agreement; and provided, further,that this Section 5.08(a) shall not restrict the Seller, 3R or Dr. Jangfrom owning up to 5% of the voting power of any publicly-tradedcompany.  For avoidance of doubt,products that are manufactured in Korea but used outside of Korea shall notqualify as products for “use within Korea,” and where a product is used shallbe determined by the site of the original installation of such product; and provided,further that this Section 5.08(a) shall not restrict the Seller or3R from complying with and enforcing contractual obligations to and ofcustomers outside of Korea pursuant to agreements in effect on the date hereofand listed on Section 5.08(a) of the Disclosure Schedule (provided thatsuch agreements may not be amended, modified or extended without thePurchaser’s consent).

 

### (b)           During theRestricted Period, the Purchaser, its Affiliates or any Person that licenses orsublicenses the Purchased Assets described in Section 2.01(a)(i) from thePurchaser, its Affiliates or such licensor or sublicensor after the Closing(other than any licensees or sublicensees referred to in the IntellectualProperty License Agreement) shall not engage, directly or indirectly, inmanufacturing, producing or supplying products or services solely for usewithin Korea of the kind manufactured, produced or supplied using suchPurchased Assets that are licensed to the Seller pursuant to the IntellectualProperty License Agreement.  Foravoidance of doubt, products that are manufactured in Korea but used outside ofKorea shall not qualify as products for “use within Korea,” and where a productis used shall be determined by the site of the original installation of suchproduct.

###  

### (c)           The RestrictedPeriod shall be extended by the length of any period during which the Seller,3R, Dr. Jang or the Purchaser, as the case may be, is in breach of the terms ofthis Section 5.08.

###  

### (d)           Each of the Seller,3R and Dr. Jang acknowledges that the covenants of the Seller, 3R and Dr. Jangset forth in this Section 5.08 are an essential element of this Agreement andthat, but for the agreement of the Seller, 3R and Dr. Jang to comply with thesecovenants, the Purchaser would not have entered into this Agreement or theIntellectual Property License Agreement. Each of the Seller, 3R and Dr. Jang acknowledges that thisSection 5.08 constitutes an independent covenant that shall not beaffected by performance or nonperformance of any

 

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### other provision of this Agreement by thePurchaser.  Each of the Seller, 3R andDr. Jang has independently consulted with its counsel and after suchconsultation agrees that the covenants set forth in this Section 5.08 arereasonable and proper.

###  

SECTION 5.09.  Training Services.  Following the Closing, the Seller shall provide,or cause to be provided, to the Purchaser certain services, all as more fullyset forth in a transition services agreement in the form and substance to bemutually agreed upon by the Seller and the Purchaser prior to the Closing andexecuted at the Closing (the ”Training Agreement”), which agreementshall provide, among other things, (i) for the payment of an aggregate ofU.S. $[***], subject to adjustment, based upon the Seller’s achievement ofmilestones to be agreed upon by the Purchaser and the Seller; and(ii) that the entire amount of any such payments shall be used promptly topay obligations owed to creditors of the Seller and that prior to any suchpayments the Seller shall present to the Purchaser for approval, which approvalshall not be unreasonably withheld or delayed, a list of such creditors and theamounts to be paid to each such creditor; provided, further, thatthe Purchaser may pay such creditors directly instead of making any suchpayments to the Seller and any and all such payments to such creditors will becredited towards the payment referenced in Section 5.09(i).

 

SECTION 5.10.  Manufacturing Agreement.  Following the Closing, the Seller shallprovide, or cause to be provided, to the Purchaser certain manufacturingservices, all as more fully set forth in a manufacturing agreement in form andsubstance to be mutually agreed upon by the Seller and the Purchaser prior tothe Closing and executed at the Closing (the ”Manufacturing Agreement”),which agreement shall provide, among other things, payment by the Purchaser ofthe Seller’s [***]; provided that such cost shall be calculated in accordancewith Korean GAAP.

 

SECTION 5.11.  Distributorship Agreement.  Following the Closing, the Purchaser shallappoint the Seller as the Purchaser’s exclusive distributor for [***] from theClosing Date and as the Purchaser’s non-exclusive distributor thereafterin Korea for all of the Purchaser’s products, all as more fully set forth in adistributorship agreement in form and substance to be mutually agreed upon bythe Seller and the Purchaser prior to the Closing and executed at the Closing(the ”Distributorship Agreement”), which agreement shall provide,among other things, for [***].

 

SECTION 5.12.  Further Action with Respect to PurchasedAssets.  (a)  As soon as reasonably practical after thedate hereof, the Seller shall provide the Purchaser with a complete and entirelist of all actions that must be taken with respect to any of the PurchasedAssets by the Seller or any other Person within sixty (60) days of theClosing Date, including the payment of any registration, maintenance or renewalfees or the filing of any documents, applications or certificates for thepurpose of maintaining, perfecting or preserving or renewing any rights in anyPurchased Assets.

 

### (b)           The Seller shall useits best efforts to have any security interest in the Purchased Assetsdescribed in Section 2.01(a)(iv) promptly removed, but in any event prior toClosing.

 

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### (c)           The Seller shall useits best efforts to promptly obtain (i) the consents referred to inSection 8.01(f) and (ii) consents of third parties to transfer theTransferred IP Agreements to the Purchaser.

###  

### (d)           The Seller shall useits best efforts to (i) obtain all consents and approvals specified inSection 3.03 of the Disclosure Schedule and (ii) complete the recording ofassignments to certain patents as specified in Item 7 toSection 3.12(c) of the Disclosure Schedule.

###  

SECTION 5.13.  Intellectual Property License Agreement.  Concurrently with the Closing, the Purchaserand/or one or more of its Affiliates and the Seller shall enter into theIntellectual Property License Agreement.

 

SECTION 5.14.  Transition Services.  Following the Closing, the Seller shallprovide, or cause to be provided, to the Purchaser certain services related tothe Business that may be reasonably requested by the Purchaser at a reasonableservice fee, all as more fully set forth in a transition services agreement inform and substance to be mutually agreed upon by the Seller and the Purchaserprior to the Closing and executed at the Closing (the ”TransitionServices Agreement”).

 

SECTION 5.15.  Further Action.  (a) If, after the Closing Date, the Seller becomes aware of, or the Purchaserbrings to the attention of the Seller, any assets of the Seller or BTI thatshould have been transferred as of the Closing Date but were not sotransferred, then such assets shall be transferred, or caused to betransferred, to the Purchaser (or to one or more Affiliates of the Purchaserdesignated by the Purchaser) as soon as possible.  This provision, however, shall not limit, in any way, the rightsand remedies of the Purchaser under this Agreement.

 

### (b)           Each of the partieshereto shall use all reasonable efforts to take, or cause to be taken, allappropriate action, do or cause to be done all things necessary, proper oradvisable under applicable Law, and to execute and deliver such documents andother papers, as may be required to carry out the provisions of this Agreementand consummate and make effective the transactions contemplated by thisAgreement.

###  

### (c)           The Seller shallpromptly notify the Purchaser regarding any resignation of any Key Employees.

###  

### (d)           Each of the Seller,Dr. Jang and 3R shall not disclose to any other Person, including any of its orhis customers or employees, any information regarding the transactionscontemplated herein, including the signing of this Agreement, without thewritten consent of the Purchaser; provided, however, that suchdisclosure may be made to such Principal Creditor which has signed anon-disclosure agreement with the Seller stating, among other things, that suchPrincipal Creditor shall keep confidential the information regarding thetransactions contemplated herein, including the signing of this Agreement.  The Purchaser acknowledges that (i) theSeller has provided prior to the date hereof certain limited information, whichdoes not include the identity of the Purchaser, regarding this transaction tocertain of its employees and

 

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### (ii) certain employees of the Purchaser havehad limited interaction with certain employees of the Seller.

###  

### (e)           The Seller shall,within five Business Days from the date the Purchaser provides to the Seller alist of IP Agreements that will not be part of the Transferred IP Agreements,confirm in writing to the Purchaser that it is not in breach of, or defaultunder, any Transferred IP Agreement and no event has occurred that, with noticeor lapse of time, would constitute a breach or default or permit termination ormodification of such Transferred IP Agreement, or if there is any such breach,default, termination or modification, shall provide details of such breach,default, termination or modification in writing to the Purchaser.

###  

SECTION 5.16.  2003 Audited Financial Statements.  As soon as practicable upon completionthereof, but in no event later than March 31, 2004, the Seller shalldeliver to the Purchaser a true and complete copy of the audited balance sheetof the Seller for the fiscal year ended December 31, 2003, and therelated audited statements of income, retained earnings, stockholders’ equityand changes in financial position of the Seller, together with all related notesand schedules thereto, accompanied by the reports thereon of the Seller’sindependent accountants.

 

# ARTICLE VIEMPLOYEE MATTERS

#  

SECTION 6.01.  Key Employees.  (a) The Seller shall use its best efforts to continue to employ, or cause tobe employed, through the Closing Date the employees of the Seller set forth inSection 6.01(a) of the Disclosure Schedule (the ”Key Employees”)on substantially the same terms and conditions as they were employed as of thedate of this Agreement.

 

### (b)           Section 6.01(b)of the Disclosure Schedule sets forth the employee benefit package for the KeyEmployees, including the current annual salary rates, bonuses, deferred orcontingent compensation, pension and other like benefits paid or payable (incash or otherwise) in 2002 and 2003, the date of employment and a descriptionof the position and job function for each of the Key Employees.

###  

### (c)           From the Purchaser’sdesignation of the Key Employees to the Closing Date, the Seller shall use itsbest efforts to facilitate the hiring of the Key Employees.  Notwithstanding anything to the contrary,neither the Purchaser nor any of its Affiliates shall have any obligation tomake any offer of employment to any such employees.  It is the intention of the Purchaser that as of the date hereof,subject to among other things, Section 8.02, the Purchaser expects to extendoffers of employment to a majority of the Key Employees.

###  

SECTION 6.02.  Required Filings.  Prior to the Closing Date, the Seller shallmake any filing and shall deliver any notices required in connection with thetransaction contemplated herein under any collective bargaining agreementinvolving the Seller or any relevant Laws of Korea, so that the Purchaser shallhave no liability under (a) such Laws of

 

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Korea with respectto any events occurring at or prior to the Closing Date or (b) suchcollective bargaining agreement.

 

# ARTICLE VIITAX MATTERS

#  

SECTION 7.01.  Tax Cooperation and Exchange ofInformation.  The Seller and thePurchaser shall provide each other with such cooperation and information aseither of them reasonably may request of the other in filing any Tax Return,amended Tax Return or claim for refund, determining a liability for Taxes or aright to a refund of Taxes, participating in or conducting any audit or otherproceeding in respect of Taxes or making representations to or furnishinginformation to parties subsequently desiring to purchase any part of thePurchased Assets from the Purchaser. Such cooperation and information shall include providing copies ofrelevant Tax Returns or portions thereof, together with accompanying schedules,related work papers and documents in their possession relating to rulings orother determinations by Tax authorities.  The Seller and the Purchaser shall make themselves (and theirrespective employees) available on a basis mutually convenient to both partiesto provide explanations of any documents or information provided under thisSection 7.01.  Each of the Sellerand the Purchaser shall retain all Tax Returns, schedules and work papers,records and other documents in its possession (or in the possession of itsAffiliates) relating to Tax matters relevant to the Purchased Assets for eachtaxable period first ending after the Closing and for all prior taxable periodsuntil the later of (a) the expiration of the statute of limitations of thetaxable periods to which such Tax Returns and other documents relate, withoutregard to extensions except to the extent notified by the other party inwriting of such extensions for the respective Tax periods, or (b) sixyears following the due date (without extension) for such Tax Returns.  After such time, before the Seller or thePurchaser shall dispose of any such documents in its possession (or in thepossession of its Affiliates), the other party shall be given the opportunity,after 90 days’ prior written notice, to remove and retain all or any part ofsuch documents as such other party may select (at such other party’s expense).  Any information obtained under thisSection 7.01 shall be kept confidential, except as may be otherwisenecessary in connection with the filing of Tax Returns or claims for refund orin conducting an audit or other proceeding.

 

SECTION 7.02.  Conveyance Taxes.  (a) The Seller shall be liable for and shall hold the Purchaser harmlessagainst any Conveyance Taxes which become payable in connection with thetransactions contemplated by this Agreement; provided that the Purchasershall deliver to the Seller by wire transfer to an account designated by theSeller any amount received by the Purchaser from any tax authorities inconnection with the payment of any such Conveyance Taxes by the Seller withinfive Business Days from such receipt. The Purchaser and the Seller shall promptly cooperate in the filing ofall necessary documents and all Tax Returns with respect to all such Taxes,including any available pre-sale filing procedures.  For purposes of clarity, notwithstanding anyshortfall between the amount of any Conveyances Taxes paid by the Seller andany amount the Purchaser receives from the tax authorities and delivers to theSeller, the Seller shall have no recourse to the Purchaser or any of itsAffiliates for any such shortfall.

 

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### (b)           The Purchaser andthe Seller will use their respective commercially reasonable efforts tominimize any Taxes payable in connection with the assignment, transfer orconveyance of the Purchased Assets hereunder.

 

# ARTICLE VIIICONDITIONS TO CLOSING

#  

SECTION 8.01.  Conditions to Obligations of the Seller.  The obligations of the Seller to consummatethe transactions contemplated by this Agreement shall be subject to thefulfillment or written waiver, at or prior to the Closing, of each of thefollowing conditions:

 

#### (a)           Representationsand Warranties.  The representationsand warranties of the Purchaser contained in this Agreement (i) that arenot qualified by “materiality” or “Material Adverse Effect” shall have beentrue and correct in all material respects when made and shall be true andcorrect in all material respects as of the Closing Date with the same force andeffect as if made as of the Closing Date and (ii) that are qualified by“materiality” or “Material Adverse Effect” shall have been true and correctwhen made and shall be true and correct as of the Closing Date with the sameforce and effect as if made as of the Closing Date, except to the extent suchrepresentations and warranties are as of another date, in which case, suchrepresentations and warranties shall be true and correct as of that date, andthe Seller shall have received a certificate from the Purchaser to such effectsigned by a duly authorized officer thereof;

####  

#### (b)           Covenants.  The covenants and agreements contained inthis Agreement to be complied with by the Purchaser on or before the ClosingDate shall have been complied with in all material respects, and the Sellershall have received a certificate from the Purchaser to such effect signed by aduly authorized officer thereof;

####  

#### (c)           No Proceeding orLitigation.  No Action shall havebeen commenced by or before any Governmental Authority against either theSeller or the Purchaser, seeking to restrain or materially and adversely alterthe transactions contemplated by this Agreement which is likely to render itimpossible or unlawful to consummate such transactions; provided, however,that the provisions of this Section 8.01(c) shall not apply if the Sellerhas directly or indirectly solicited or encouraged any such Action;

####  

#### (d)           AncillaryAgreements.  The Purchaser shallhave executed and delivered to the Seller each of the Ancillary Agreements towhich it is a party;

####  

#### (e)           RegulatoryApproval.  If the Person designatedby the Purchaser to purchase the Purchased Assets is not an entity organizedand existing under the laws of Korea, the regulatory authorities of Korea shallhave approved the transfer of the Owned Intellectual Property and TransferredIP Agreements to such Person;

####  

#### (f)            Consent ofCertain Patent Owners.  The Sellershall have received written consents from co-owners of patents set forth inSection 3.12(c) to the Disclosure Schedule to transfer rights of theSeller in such patents to the Purchaser unless the

 

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#### Purchaser decides not to include such patents for which writtenconsents have not been received among the Purchased Assets described inSection 2.01(a)(i); and

####  

#### (g)           Opinion ofCounsel.  The Purchaser shall havedelivered to the Seller an opinion of counsel for the Purchaser in form andsubstance reasonably satisfactory to the Seller with respect to enforceabilityof this Agreement and due authorization on the part of the Purchaser to enterinto this Agreement and the Ancillary Agreements to which it is a party andperform its obligations under this Agreement and the Ancillary Agreements towhich it is a party, with typical qualifications pertaining to such opinion.

####  

SECTION 8.02.  Conditions to Obligations of thePurchaser.  The obligations of thePurchaser to consummate the transactions contemplated by this Agreement shallbe subject to the fulfillment or written waiver, at or prior to the Closing, ofeach of the following conditions:

 

#### (a)           Representationsand Warranties.  The representationsand warranties of the Seller, 3R and Dr. Jang contained in this Agreement(i) that are not qualified by “materiality” or “Material Adverse Effect”shall have been true and correct in all material respects when made and shallbe true and correct in all material respects as of the Closing Date with thesame force and effect as if made as of the Closing Date and (ii) that arequalified by “materiality” or “Material Adverse Effect” shall have been trueand correct when made and shall be true and correct as of the Closing Date withthe same force and effect as if made as of the Closing Date, except, in eachcase, to the extent such representations and warranties are as of another date,in which case, such representations and warranties shall be true and correct asof that date, and the Purchaser shall have received a certificate of the Sellerto such effect signed by duly authorized officers thereof;

####  

#### (b)           Covenants.  The covenants and agreements contained inthis Agreement to be complied with by the Seller on or before the Closing Dateshall have been complied with in all material respects, and the Purchaser shallhave received a certificate from the Seller to such effect signed by a dulyauthorized officer thereof;

####  

#### (c)           No Proceeding orLitigation.  No Action shall havebeen commenced or threatened by or before any Governmental Authority againsteither the Seller or the Purchaser, seeking to restrain or materially andadversely alter the transactions contemplated by this Agreement which is likelyto render it impossible or unlawful to consummate such transactions or whichcould have a Material Adverse Effect; provided, however, that theprovisions of this Section 8.02(c) shall not apply if the Purchaser hasdirectly or indirectly solicited or encouraged any such Action;

####  

#### (d)           AncillaryAgreements.  The Seller shall haveexecuted and delivered to the Purchaser each of the Ancillary Agreements towhich it is a party;

####  

#### (e)           Consents andApprovals.  The Purchaser and theSeller shall have received, each in form and substance satisfactory to thePurchaser, all authorizations, consents, orders and approvals of allGovernmental Authorities and officials (including those described inSection 3.03 of the Disclosure Schedule and Section 4.03) and allthird

 

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#### party consents (including those in connection with the transfer of theTransferred IP Agreements to the Purchaser) necessary for the consummation ofthe transactions contemplated by this Agreement and the Ancillary Agreements,including all third party consents required under (A) any Purchased Assetsor (B) any relevant labor Laws in Korea;

####  

#### (f)            Due Diligence.  The Purchaser shall have completed all ofits legal, accounting, financial, employee and creditor due diligence with respectto the Seller and its Affiliates and shall in its reasonable business judgmenthave decided that the results of such due diligence from the date hereof to theClosing, together with such due diligence completed on or prior to the datehereof, do not and will not lead to a frustration of its purpose of thetransactions contemplated in this Agreement and the Ancillary Agreements;

####  

#### (g)           No MaterialAdverse Effect.  No event or eventsshall have occurred, or be reasonably likely to occur, which, individually orin the aggregate, have, or could have, a Material Adverse Effect;

####  

#### (h)           Employees.  (i) At least 80% of the Key Employees towhom the Purchaser has made offers of employment with compensation packages(including benefits) which are comparable to such Key Employee’s currentcompensation packages with the Seller, on or prior to the Closing shall haveaccepted the Purchaser’s offer of employment and each of the Key Employees whoaccepts the Purchaser’s offer of employment shall have entered into the Purchaser’sstandard confidentiality and assignment of intellectual property rightsagreements with the Purchaser and (ii) the composition of such Key Employeesaccepting the Purchaser’s offer of employment shall be completely satisfactoryto the Purchaser;

####  

#### (i)            Release ofEncumbrances.  Any and allEncumbrances on the Purchased Assets shall have been have been released;

####  

#### (j)            CreditorsApproval.  Each of the PrincipalCreditors and any other holder of Indebtedness of the Seller that is owed morethan 100,000,000 Korean Won on the Closing Date shall have executed anddelivered the Creditor Consent to each of the Seller and the Purchaser and suchCreditor Consent shall be effective;

####  

#### (k)           Opinion ofCounsel.  The Seller shall havedelivered to the Purchaser the opinion of counsel for the Seller in form andsubstance reasonably acceptable to the Purchaser, with typical qualificationspertaining to such opinion;

####  

#### (l)            BTI Assets.  Simultaneously with the Closing, BTI shallhave transferred the BTI Assets, if any, to the Purchaser;

####  

#### (m)          The Purchaser’sBoard Approval.  This Agreement andthe transactions contemplated by this Agreement shall have been duly approvedby the Board of Directors of the Purchaser; and

 

38

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#### (n)                                 RecordingAssignments.  The Seller shall havecompleted the recording of assignments to certain patents as specified inItem 7 to Section 3.12(c) of the Disclosure Schedule other than therecording of assignment to one patent (Patent No. 74614) in Taiwan.

####  

# ARTICLE IXINDEMNIFICATION

#  

SECTION 9.01.  Survival of Representations andWarranties.  (a)  The representations and warranties of theSeller, 3R and Dr. Jang contained in this Agreement and the AncillaryAgreements shall survive the Closing until the second anniversary of theClosing; provided, however, that the representations andwarranties made pursuant to Section 3.14 shall survive indefinitely.  Neither the period of survival nor theliability of the Seller, 3R and Dr. Jang with respect to the Seller’s, 3R’s andDr. Jang’s representations and warranties shall be reduced by any investigationmade at any time by or on behalf of the Purchaser.  If written notice of a claim has been given prior to the expirationof the applicable representations and warranties by the Purchaser to theSeller, 3R and Dr. Jang, then the relevant representations and warranties shallsurvive as to such claim, until such claim has been finally resolved.

 

### (b)                                 Therepresentations and warranties of the Purchaser contained in this Agreement andthe Ancillary Agreements shall survive the Closing until the second anniversaryof the Closing.  Neither the period ofsurvival nor the liability of the Purchaser with respect to the Purchaser’s representationsand warranties shall be reduced by any investigation made at any time by or onbehalf of the Seller.  If written noticeof a claim has been given prior to the expiration of the applicablerepresentations and warranties by the Seller to the Purchaser, then therelevant representations and warranties shall survive as to such claim, untilsuch claim has been finally resolved.

###  

SECTION 9.02.  Indemnification by the Seller, 3R and Dr.Jang.  The Purchaser and itsAffiliates, officers, directors, employees, agents, successors and assigns (eacha ”Purchaser Indemnified Party”) shall be indemnified and heldharmless by the Seller, 3R and Dr. Jang, on a joint and several basis, for andagainst any and all Liabilities, losses, damages, claims, costs and expenses,interest, awards, judgments and penalties (including attorneys’ andconsultants’ fees and expenses) actually suffered or incurred by them(including any Action brought or otherwise initiated by any of them)(hereinafter a ”Loss”), arising out of or resulting from:

 

#### (a)                                  thebreach of any representation or warranty made by the Seller, 3R and Dr. Jangcontained in the Acquisition Documents;

####  

#### (b)                                 thebreach of any covenant or agreement by the Seller, 3R and Dr. Jang contained inthe Acquisition Documents;

####  

#### (c)                                  anyand all Losses suffered or incurred by the Purchaser by reason of or inconnection with any claim or cause of action of any third party, includingMotorola, Inc., to the extent arising out of any action, inaction, event,condition, liability or obligation of

 

39

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#### the Seller occurring or existing on or prior to the Closing (other thanthe Assumed Liabilities) and any and all Losses suffered or incurred by thePurchaser by reason of or in connection with any claim or cause of action ofMotorola Inc. arising out of the Seller’s use of any of the Purchased Assets pursuant to the Intellectual PropertyLicense Agreement on or after the Closing; or

####  

#### (d)                                 anyClaim for the benefit of the Seller’s creditors and relating to this Agreementor the transactions contemplated hereby, or arising out of any insolvency ofthe Seller.

####  

To the extent that the Seller’s, 3R’s or Dr. Jang’sundertakings set forth in this Section 9.02 may be unenforceable, theSeller, 3R or Dr. Jang, as the case may be, shall contribute the maximum amountthat it is permitted to contribute under applicable Law to the payment andsatisfaction of all Losses incurred by the Purchaser Indemnified Parties.  To the extent the Purchaser offsets any ofthe Holdback Amount to cover any Losses pursuant to Section 2.07, 3R, Dr.Jang or the Seller shall not be required to indemnify the Purchaser IndemnifiedParty pursuant to this Section 9.02 for such Losses previously covered bysuch offset of the Holdback Amount.

 

SECTION 9.03.  Indemnification by the Purchaser.  The Seller and its Affiliates, officers,directors, employees, agents, successors and assigns (each a ”SellerIndemnified Party”) shall be indemnified and held harmless by the Purchaserfor and against any and all Losses, arising out of or resulting from:

 

#### (a)                                  thebreach of any representation or warranty made by the Purchaser contained in theAcquisition Documents;

####  

#### (b)                                 thebreach of any covenant or agreement by the Purchaser contained in theAcquisition Documents; or

####  

#### (c)                                  anyand all Losses suffered or incurred by the Seller or its Affiliates after theClosing by reason of or in connection with any claim or cause of action ofMotorola Inc. arising out of the Purchaser’s use of the Purchased Assets afterthe Closing.

####  

To the extent that the Purchaser’s undertakings setforth in this Section 9.03 may be unenforceable, the Purchaser shallcontribute the maximum amount that it is permitted to contribute underapplicable Law to the payment and satisfaction of all Losses incurred by theSeller Indemnified Parties.

 

SECTION 9.04.  Notice of Loss; Third Party Claims.  (a)  An Indemnified Party shallgive the Indemnifying Party notice of any matter which an Indemnified Party hasdetermined has given or could give rise to a right of indemnification underthis Agreement, within 60 days of such determination stating the amount of theLoss, if known, and method of computation thereof, and containing a referenceto the provisions of this Agreement in respect of which such right ofindemnification is claimed or arises; provided that with respect to anyindemnification arising out of Section 9.02(a) or 9.03(a), other than suchindemnification arising out of breach of representations and warranties madepursuant to Section 3.14, such notice shall be given no later than 30 daysafter the second anniversary of the Closing Date.

 

40

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### (b)                                 Ifan Indemnified Party shall receive notice of any Action, audit, demand orassessment (each, a ”Third Party Claim”) against it or which maygive rise to a claim for Loss under this Article IX, within 30 days of thereceipt of such notice, the Indemnified Party shall give the Indemnifying Partynotice of such Third Party Claim; provided, however, that thefailure to provide such notice shall not release the Indemnifying Party fromany of its obligations under this Article IX except to the extent that theIndemnifying Party is materially prejudiced by such failure and shall notrelieve the Indemnifying Party from any other obligation or Liability that itmay have to any Indemnified Party otherwise than under thisArticle IX.  If the IndemnifyingParty demonstrates, to the reasonable satisfaction of the Indemnified Party,the financial capability of the Indemnifying Party to indemnify the IndemnifiedParty hereunder against any Losses that may result from such Third Party Claim,then the Indemnifying Party shall be entitled to assume and control the defenseof such Third Party Claim at its expense and through counsel of its choice ifit gives notice of its intention to do so to the Indemnified Party within fivedays of the receipt of such notice from the Indemnified Party; provided,however, that if there exists or is reasonably likely to exist aconflict of interest that would make it inappropriate in the reasonablejudgment of the Indemnified Party for the same counsel to represent both theIndemnified Party and the Indemnifying Party, then the Indemnified Party shallbe entitled to retain its own counsel in each jurisdiction for which theIndemnified Party determines counsel is required, at the expense of theIndemnifying Party; provided, further, that if (i) theIndemnified Party and the Indemnifying Party cannot come to an agreement as tothe obligation of the Indemnifying Party to indemnify the Indemnified Partyagainst any and all Losses that may result from such Third Party Claim within 6months from the date the Indemnifying Party assumes the defense of such ThirdParty Claim or (ii) the Indemnified Party reasonably believes that theIndemnifying Party is not diligently defending such Third Party Claim, then theIndemnified Party shall be entitled to assume and control the defense of suchThird Party Claim.  In the event thatthe Indemnifying Party exercises the right to undertake any such defenseagainst any such Third Party Claim as provided above, the Indemnified Partyshall cooperate with the Indemnifying Party in such defense and make availableto the Indemnifying Party, at the Indemnifying Party’s expense, all witnesses,pertinent records, materials and information in the Indemnified Party’spossession or under the Indemnified Party’s control relating thereto as isreasonably required by the Indemnifying Party. Similarly, in the event the Indemnified Party is, directly orindirectly, conducting the defense against any such Third Party Claim, theIndemnifying Party shall cooperate with the Indemnified Party in such defenseand make available to the Indemnified Party, at the Indemnifying Party’sexpense, all such witnesses, records, materials and information in theIndemnifying Party’s possession or under the Indemnifying Party’s controlrelating thereto as is reasonably required by the Indemnified Party.  No such Third Party Claim may be settled bythe Indemnifying Party without the prior written consent of the IndemnifiedParty, which consent shall not be unreasonably withheld or delayed.

###  

SECTION 9.05.  Limitations on Liability.  (a) In no event will any party be liable to the other, pursuant to thisArticle IX or otherwise, for [***].

 

### (b)                                 Inno event will the aggregate liability of the Seller, 3R and Dr. Jang, on theone hand, and the Purchaser, on the other hand, pursuant to thisArticle IX, with respect to its or their, as the case may be,representations and warranties exceed U.S. $[***].

 

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### (c)                                  Notwithstandinganything in this Agreement to the contrary, in no event shall any IndemnifiedParty recover, by claim for indemnification or otherwise, any Losses until the aggregateof all Losses recoverable by any Indemnified Party exceeds U.S. $[***], inwhich event the full amount of all Losses shall be recoverable by anyIndemnified Party in accordance with the terms of this Agreement.

###  

SECTION 9.06.  Exclusivity.  The remedies set forth in Section 2.07and this Article IX are the exclusive remedies, pursuant to this Agreementor otherwise, for any breach of any representation or warranty by any party inor pursuant to this Agreement.

 

SECTION 9.07.  Knowing Fraud.  Nothing in Section 9.05 or 9.06 shallbe a defense to any claim otherwise assertable against any Person for suchPerson’s own knowing fraud.

 

SECTION 9.08.  Tax Treatment.  (a) The Seller and the Purchaser agree that all payments made by any of theSeller, 3R and Dr. Jang on the one hand and the Purchaser on the other hand toor for the benefit of the other under this Article IX, under otherindemnity provisions of this Agreement and for any misrepresentations orbreaches of warranties or covenants shall be treated as adjustments to thePurchase Price for Tax purposes and that such treatment shall govern forpurposes hereof except to the extent that the Laws of a particular jurisdictionprovide otherwise, in which case such payments shall be made in an amount sufficientto indemnify the relevant party on an after-Tax basis.

 

# ARTICLE XTERMINATION, AMENDMENT AND WAIVER

#  

SECTION 10.01.  Termination.  This Agreement may be terminated at any timeprior to the Closing:

 

#### (a)                                  bythe Purchaser if, between the date hereof and the Closing:  (i) an event or condition occurs thathas resulted in a Material Adverse Effect, (ii) any representations andwarranties of the Seller contained in this Agreement (A) that are not qualifiedby “materiality” or “Material Adverse Effect” shall not have been true andcorrect in all material respects when made or (B) that are qualified by“materiality” or “Material Adverse Effect” shall not have been true and correctwhen made, (iii) the Seller shall not have complied in all materialrespects with the covenants or agreements contained in this Agreement to becomplied with by it or (iv) the Seller makes a general assignment for thebenefit of creditors, or any proceeding shall be instituted by or against theSeller seeking to adjudicate any of them a bankrupt or insolvent, or seekingliquidation, winding up or reorganization, arrangement, adjustment, protection,relief or composition of its debts under any Law relating to bankruptcy,insolvency or reorganization;

####  

#### (b)                                 bythe Seller if, between the date hereof and the Closing:  (i) any representations and warranties ofthe Purchaser contained in this Agreement (A) that are not qualified by“materiality” or “Material Adverse Effect” shall not have been true and

 

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#### correct in all material respects when made or (B) that are qualified by“materiality” or “Material Adverse Effect” shall not have been true and correctwhen made, (ii) the Purchaser shall not have complied in all material respectswith the covenants or agreements contained in this Agreement to be compliedwith by it or (iii) the Purchaser makes a general assignment for the benefit ofcreditors, or any proceeding shall be instituted by or against the Purchaserseeking to adjudicate any of them a bankrupt or insolvent, or seekingliquidation, winding up or reorganization, arrangement, adjustment, protection,relief or composition of its debts under any Law relating to bankruptcy,insolvency or reorganization;

####  

#### (c)                                  byeither the Seller or the Purchaser if the Closing shall not have occurred within 90 days from the date hereof;provided, however, that the right to terminate this Agreementunder this Section 10.01(c) shall not be available to any party whosefailure to fulfill any obligation under this Agreement shall have been thecause of, or shall have resulted in, the failure of the Closing to occur on orprior to such date;

####  

#### (d)                                 byeither the Seller or the Purchaser in the event that any Governmental Authorityshall have issued an order, decree or ruling or taken any other actionrestraining, enjoining or otherwise prohibiting the transactions contemplatedby this Agreement and such order, decree, ruling or other action shall havebecome final and nonappealable; or

####  

#### (e)                                  bythe mutual written consent of the Seller and the Purchaser.

####  

SECTION 10.02.  Effect of Termination.  In the event of termination of thisAgreement as provided in Section 10.01, this Agreement shall forthwithbecome void and there shall be no liability on the part of any party heretoexcept (a) as set forth in Sections 5.03 and 11.01 and (b) thatnothing herein shall relieve any party from liability for any breach of thisAgreement.

 

SECTION 10.03.  Amendment.  This Agreement may not be amended or modified except (a) byan instrument in writing signed by, or on behalf of, the Seller, 3R, Dr. Jangand the Purchaser or (b) by a waiver in accordance withSection 10.04.

 

SECTION 10.04.  Waiver.  Any term or condition to this agreement may be waived, or thetime for the performance of any of the obligations may be extended, at any timeby the party that is entitled to the benefit thereof.  Any such extension or waiver shall be valid only if set forth inan instrument in writing signed by the party to be bound thereby.  Any waiver of any term or condition shallnot be construed as a waiver of any subsequent breach or a subsequent waiver ofthe same term or condition, or a waiver of any other term or condition of thisAgreement.  The failure of any partyhereto to assert any of its rights hereunder shall not constitute a waiver ofany of such rights.  Other than asspecified in Sections 9.06 and 9.07, all rights and remedies existingunder this Agreement are cumulative to, and not exclusive of, any rights orremedies otherwise available.

 

43

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# ARTICLE XI

#  

# GENERAL PROVISIONS

#  

SECTION 11.01.  Expenses.  Except as otherwise specified in this Agreement, all costs andexpenses, including fees and disbursements of counsel, financial advisors andaccountants, incurred in connection with this Agreement and the transactionscontemplated by this Agreement shall be paid by the party incurring such costsand expenses, whether or not the Closing shall have occurred.

 

SECTION 11.02.  Notices.  All notices, requests, claims, demands and other communicationshereunder shall be in writing and shall be given or made (and shall be deemedto have been duly given or made upon receipt) by delivery in person, by aninternationally recognized overnight courier service, by facsimile orregistered or certified mail (postage prepaid, return receipt requested) to therespective parties hereto at the following addresses (or at such other addressfor a party as shall be specified in a notice given in accordance with this Section 11.02):

 

(a)                                                                                  ifto the Seller:Hyundai Syscomm, Inc.San 136-1Ami-ri, Bubal-eubIchon-si, Kyongki-do467-701 KoreaTelecopy:  (8231) 639-8198Attention:  Dr. Seong Ik Jang

 

 

with a copy to:

 

Bingham McCutchen LLP1900 University AvenueEast Palo Alto, CA 94303USATelecopy: (650) 849-4800Attention: Bart Deamer, Esq.

 

and

 

Shin & KimAce Tower 7th Floor, 1-170 Soonhwa-dong,Chung-ku, Seoul 100-712KoreaTelecopy: (822) 756-6226Attention: Hwon Jeong, Esq.

 

44

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(b)                                                                                 ifto 3R or Dr. Jang:4fl Boramae Academy Tower395-69 Shindaebang-DongTongjak-Gu, Seoul 156-010KoreaTelecopy:  (822) 840-3614Attention:  Dr. Seong Ik Jang

 

(c)                                                                                  ifto the Purchaser:UTStarcom, Inc.1275 Harbor Bay ParkwayAlameda, CA  94502USATelecopy:  (510) 864-8802Attention:  General Counsel

 

with a copy to:

 

Shearman & Sterling LLP

1080 Marsh Road

Menlo Park, CA  94025

USA

Telecopy:  (650) 838-3699

Attention: Carmen Chang, Esq.

 

and

 

Kim & Chang

223 Naeja – Dong

Chongro-Ku, Seoul

110-720 Korea

Telecopy:  (822) 3703-1590

Attention: Young Jay Ro, Esq.

 

SECTION 11.03.  Public Announcements.  Unless otherwise required by Law orsecurities exchange rule or regulation, none of the parties hereto shall make,or cause to be made, any press release or public announcement in respect of theAcquisition Documents, including this Agreement and the Ancillary Agreements,or the transactions contemplated hereby and thereby or otherwise communicatewith any news media without prior written consent of (i) the Seller, in thecase of the Purchaser, and (ii) the Purchaser, in the case of the Seller, 3R orDr. Jang, and the parties hereto shall cooperate as to the timing and contentsof any such press release, public announcement or communication.  Notwithstanding the foregoing, none of theSeller, 3R and Dr. Jang shall make, or cause to be made, any such press releaseor public

 

45

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announcementwithout the prior written consent of the Purchaser.  The parties hereto shall cooperate as to the mutually agreeabletime to make such press release or public announcement.

 

SECTION 11.04.  Severability.  If any term or other provision of thisAgreement is invalid, illegal or incapable of being enforced by any Law orpublic policy, all other terms and provisions of this Agreement shallnevertheless remain in full force and effect for so long as the economic orlegal substance of the transactions contemplated hereby is not affected in anymanner materially adverse to each party hereto.  Upon such determination that any term or other provision isinvalid, illegal or incapable of being enforced, the parties hereto shallnegotiate in good faith to modify this Agreement so as to effect the originalintent of the parties as closely as possible in an acceptable manner in orderthat the transactions contemplated hereby are consummated as originallycontemplated to the greatest extent possible.

 

SECTION 11.05.  Entire Agreement.  This Agreement and the Ancillary Agreementsconstitute the entire agreement of the parties hereto with respect to thesubject matter hereof and thereof and supersede all prior agreements andundertakings, both written and oral, among the parties with respect to thesubject matter hereof and thereof.

 

SECTION 11.06.  Assignment.  This Agreement may not be assigned by operation of law orotherwise without the express written consent of the Seller and the Purchaser(which consent may be granted or withheld in the sole discretion of the Selleror the Purchaser); provided, however, that the Purchaser mayassign this Agreement or any of its rights and obligations hereunder to one ormore Affiliates of the Purchaser without the consent of the Seller, in whichcase the Purchaser shall enter into an express written guarantee in favor ofthe Seller of the performance of all covenants and obligations under orpursuant to this Agreement undertaken by such assignee.

 

SECTION 11.07.  No Third Party Beneficiaries.  Except for the provisions of Article IXrelating to indemnified parties, this Agreement shall be binding upon and inuresolely to the benefit of the parties hereto and their respective successors andpermitted assigns and nothing herein, express or implied, is intended to orshall confer upon any other Person, including any union or any employee orformer employee of the Seller, any legal or equitable right, benefit or remedyof any nature whatsoever, including any rights of employment for any specifiedperiod, under or by reason of this Agreement.

 

SECTION 11.08.  Governing Law.  This Agreement shall be governed by, andconstrued in accordance with, the laws of the State of New York applicable tocontracts executed in and to be performed in that State.

 

SECTION 11.09.  Dispute Resolution.  Any dispute, controversy or claim arisingout of or in connection with this Agreement shall be finally settled byarbitration under the Rules of Arbitration of the International Chamber ofCommerce by three arbitrators appointed in accordance with the Rules ofArbitration of the International Chamber of Commerce.  The venue of the arbitration shall be San Francisco, California,USA.  The language of the proceedingsshall be English.

 

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SECTION 11.10.  Headings.  The descriptive headings contained in this Agreement are includedfor convenience of reference only and shall not affect in any way the meaningor interpretation of this Agreement.

 

SECTION 11.11.  Counterparts.  This Agreement may be executed and delivered(including by facsimile transmission) in one or more counterparts, and by thedifferent parties hereto in separate counterparts, each of which when executedshall be deemed to be an original, but all of which taken together shallconstitute one and the same agreement.

 

SECTION 11.12.  Interpretation and Rules ofConstruction.  In this Agreement,except to the extent otherwise provided or that the context otherwise requires:

 

#### (a)                                  wheneverthe words “include,” “includes” or “including” are used in this Agreement, theyare deemed to be followed by the words “without limitation”;

####  

#### (b)                                 thewords “hereof,” “herein” and “hereunder” and words of similar import, when usedin this Agreement, refer to this Agreement as a whole and not to any particularprovision of this Agreement;

####  

#### (c)                                  thedefinitions contained in this Agreement are applicable to the singular as wellas the plural forms of such terms;

####  

#### (d)                                 anyLaw defined or referred to herein or in any agreement or instrument that isreferred to herein means such Law or statute as from time to time amended,modified or supplemented, including by succession of comparable successor Laws;

####  

#### (e)                                  referencesto a Person are also to its successors and permitted assigns; and

####  

#### (f)                                    theuse of “or” is not intended to be exclusive unless expressly indicatedotherwise.

 

47

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IN WITNESS WHEREOF, the Seller, 3R, Dr. Jang and thePurchaser have caused this Agreement to be executed as of the date firstwritten above by their respective officers thereunto duly authorized.

 
|   | HYUNDAI  SYSCOMM, INC. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |  /s/ |   |
|   |                   | Name: |   |
|   |                   | Title: |   |
|   |                   |   |   |
|   |                   |   |   |
|   | 3R  INC.               |   |
|   |                   |   |   |
|   |                   |   |   |
|   | By:                    |  /s/ |   |
|   |                   | Name: |   |
|   |                   | Title: |   |
|   |                   |   |   |
|   |                   |   |   |
|   | DR.  SEONG-IK JANG     |   |
|   |                   |   |   |
|   |                   |   |   |
|   | By:                    |  /s/ Seong Ik-Jang |   |
|   |                   | Name:  SeongIk-Jang |   |
|   |                   |   |   |
|   |                   |   |   |
|   | UTSTARCOM,  INC.       |   |
|   |                   |   |   |
|   |                   |   |   |
|   | By:                    |  /s/ Michael J. Sophie |   |
|   |                   | Name:  Michael J. Sophie |

 

48

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Exhibit A

 

List of PrincipalCreditors

 

 

Kookmin Bank

 

Korea Development Bank

 

Korea Exchange Bank

 

Hana Bank

 

J-1 Bank

 

Hynix Semiconductor Inc.

 

Jo Yon

 

3R

 

BTI

 

A-1

----

 

Exhibit B

 

Form of CreditorConsent

 

 

               ,2004

 

Hyundai Syscomm, Inc.

San 136-1

Ami-ri, Bubal-eub

Ichon-si, Kyongki-do

467-701 Korea

 

UTStarcom, Inc.

1275 Harbor Bay Parkway

Alameda, CA 94502

USA

 

Re:                               CreditorConsent

 

We write thisletter agreement to Hyundai Syscomm, Inc. (“HSI”) and UTStarcom, Inc. (“UTSI”)in respect of all of the outstanding loans and obligations owed by HSI to theundersigned creditor and to provide to HSI and UTSI our consent to the terms ofthe transactions contemplated by the APA (as defined below).  Reference is made hereby to the AssetPurchase Agreement (the “APA”) dated as of February 26, 2004 by and among HSI,UTSI, 3R Inc. and Dr. Seong-Ik Jang and to the previously-executedNon-Disclosure and Confidentiality Agreement (the “NDA”) by and between HSI andthe undersigned creditor.  Allcapitalized terms used but not defined herein shall have the meanings ascribedto them in the APA and the NDA.

 

We understand the following to be true:

 

1.                                       UTSIand HSI have entered into the APA and the APA contemplates that certainintellectual property of HSI (the “Assets”), including but not limited topatents, software license agreements, copyrights, etc., will be sold by HSI toUTSI or a subsidiary of UTSI.  Thepurchase price for the Assets will be approximately U.S. $[***] plus acontingent additional U.S. $[***] (the “Purchase Price”); the APA also providesfor a training agreement under which HSI can earn an additional U.S.$[***]following the closing.

 

2.                                       Theundersigned creditor and HSI have entered into the NDA; and

 

3.                                       Arepresentative of HSI has given a presentation (the “Presentation”) to theundersigned creditor regarding the APA, the transactions contemplated by theAPA (including but not limited to the sale and purchase of the Assets, thelicense back arrangement by and between UTSI and HSI subsequent to thecompletion of the sale and purchase of the Assets (the “License Agreement”) andthe training services arrangement and payment for such services as provided inSection 5.09 of the APA), the Purchase Price, the condition

 

B-1

----

 

(financial, liquidity andotherwise) and prospects of HSI (the “Financial Condition”) and the use of theproceeds (including but not limited to the repayment of HSI’s creditors) of thesale of the Assets by HSI as set forth in Section 2.03(a) and (d) of the APA(the “Use of Proceeds”).

 

We, in connection withthe foregoing, hereby acknowledge and agree as follows:

 

1.                                       Theundersigned creditor has informed itself to the extent it deems necessary andadvisable for the purpose of this letter agreement, the contents of the APA,the transactions contemplated by the APA, the Presentation, the LicenseAgreement, the Purchase Price, the Financial Condition and the Use of Proceeds;

 

2.                                       Theundersigned creditor hereby grants to HSI consent with respect to the mattersset forth in section 1 above; and

 

3.                                       Theundersigned creditor will not any raise any objections or claims with respectto the matters set forth in section 1 above.

 

B-2

----

 

Please acknowledgeyour acceptance of the terms of this letter agreement by signing in the spaceprovided below.

 

 
|   | Very  truly yours,  |
|--------|---------------------|
|   |                |
|   |                |   |
|   | (name  of creditor) |   |
|   |                |   |
|   |                |   |
|   | By:                 |   |
|   |                | Name: |
|   |                | Title: |
|        |                     |  |  |

 

 

Agreed and Accepted this

 

         day of                               ,2004:

 
| **HYUNDAI SYSCOMM, INC.**                                                                                                                                                                                                                                    |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                                                                                                                                         |   |
| By:                                                                                                                                                                                                                                                          |   |   |   |
|                                                                                                                                                                                                                                                         | Name:  |
|                                                                                                                                                                                                                                                         | Title: |
|                                                                                                                                                                                                                                                         |   |
|                                                                                                                                                                                                                                                         |   |
| Agreed and Accepted this                                                                                                                                                                                                                                     |   |
|                                                                                                                                                                                                                                                         |   |
|             day of                               ,  2004: |   |
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| **UTSTARCOM, INC.**                                                                                                                                                                                                                                          |   |
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|                                                                                                                                                                                                                                                         |   |
| By:                                                                                                                                                                                                                                                          |   |   |   |
|                                                                                                                                                                                                                                                         | Name:  |
|                                                                                                                                                                                                                                                         | Title: |
|                                                                                                                                                                                                                                                              |        |  |  |  |  |

 

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Exhibit C

 

Form of IntellectualProperty License Agreement

 

This Intellectual Property License Agreement(this ”Agreement”) is made and entered into this              day of [                  ], 2004(the ”Effective Date”), by and between[            ],each a corporation organized under the laws of [                                            ],with offices at                                                            (collectively, ”Licensor”), and Hyundai Syscomm, Inc., a corporationorganized under the laws of the Republic of Korea, with offices at                                                       (“HSI”).  Either Licensor or HSI may bereferred to herein as a ”Party” or together as the ”Parties,” as thecase may require.

 

**RECITALS**

** **

WHEREAS, UTStarcom, Inc., Licensor’s parent (“UTSI”),and HSI have entered into certain Asset Purchase Agreement, dated as ofFebruary 26, 2004 (the ”Asset Purchase Agreement”) pursuant towhich UTSI will acquire all of the Purchased Assets (as defined in the AssetPurchase Agreement), including but not limited to intellectual property, uponthe terms and conditions set forth in the Asset Purchase Agreement;

 

WHEREAS, pursuant to the Asset Purchase Agreement, HSIwill sell, assign, transfer, deliver and convey to UTSI or an affiliatedesignated by UTSI before the Closing Date the Purchased Assets that includethe Licensed Intellectual Property (as defined below in Section 1 of thisAgreement);

 

WHEREAS, UTSI or an affiliate designated by UTSIbefore the Closing Date will assign, transfer, deliver and convey to Licensor(and thereafter Licensor shall own) all of the intellectual property includedin the Purchased Assets;

 

WHEREAS, HSI desires to have the right to use theintellectual property transferred to Licensor pursuant to the Asset PurchaseAgreement; and

 

WHEREAS, Licensor hereto wishes to license to HSI suchintellectual property in accordance with the terms and conditions contained inthis Agreement.

 

NOW, THEREFORE, in consideration of the promises andthe mutual covenants and undertakings contained herein and for other good andvaluable consideration, the receipt and sufficiency of which is herebyacknowledged, the Parties hereto, intending to be legally bound hereby, doagree as follows:

 

1.                                                                                                               DEFINITIONS

 

Capitalized terms used herein shall have the meaningsascribed to such terms in the Asset Purchase Agreement unless otherwise definedherein or as set forth below.

 

1.1                                 “Business”means the business of manufacturing and selling wireless telecommunicationequipment, software, systems and related products.

 

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1.2                                 “ConfidentialInformation” means (i) all information and proprietary materials,including without limitation trade secrets and/or know-how, of HSI (aftergiving effect to the transactions contemplated by the Asset Purchase Agreement)which is not publicly known and is in the possession of, or disclosed by HSI toLicensor or a representative of Licensor, in regard to HSI’s business orproducts, including but not limited to HSI’s Intellectual Property and proprietarybusiness information, including but not limited to information relating toSection 6 of this Agreement, other than the Purchased Assets, and(ii) all information and proprietary materials, including withoutlimitation trade secrets and/or know-how and any Confidential Informationwhich is the Purchased Asset transferred pursuant to the Asset PurchaseAgreement, of UTSI and/or Licensor, as the case may be, (after giving effect tothe transactions contemplated by the Asset Purchase Agreement) which is notpublicly known and is in the possession of, or disclosed by UTSI and/orLicensor, as the case may be, to HSI or a representative of HSI in regard toUTSI’s and/or Licensor’s business or products, including but not limited toUTSI’s Intellectual Property and/or Licensor’s Intellectual Property andproprietary business information, including but not limited to informationrelating to Section 6 of this Agreement. Notwithstanding the foregoing, Confidential Information does not includeinformation that (i) the receiving Party can prove was in its possessionprior to the receipt thereof from the other Party (other than, in the case ofHSI, the Licensed Intellectual Property); (ii) the receiving Party canprove was independently developed by the receiving Party without the use of anyConfidential Information of the other Party; (iii) now is in or hereaftercomes into the public domain through no act or failure to act by the receivingParty or by any of its officers, directors, employees, contractors, consultantsor agents; or (iv) the receiving Party can prove was lawfully received,after receipt from the other Party, from a third party on a non-confidentialbasis who did not itself acquire the same directly or indirectly from the otherParty.

 

1.3                                 “HSIAffiliate” means any other person, entity or organization controlling,controlled by or under common control with, at any time HSI on or after theClosing Date, with “control” for such purpose meaning the possession, directlyor indirectly, of the power to direct or cause the direction of the managementand policies of such person, entity or organization, whether through theownership of voting securities or voting interests, by contract or otherwise.

 

1.4                                 “HSIRevenues” means any and all revenues, calculated on the same basis as revenuesare calculated as presented in HSI’s audited financial statements in accordancewith Korean GAAP, derived by HSI from sale, lease, supply, manufacture, use orother disposal of products or services directly or indirectly using the LicensedIntellectual Property.

 

1.5                                 “Improvements”means inventions, additions, modifications, formulations, variations,enhancements, refinements or derivative works of or based on the LicensedIntellectual Property or on other Improvements.

 

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1.6                                 “IntellectualProperty” means (a) Patents, (b) Copyrights, (c) Trade Secretsand (d) Software (other than Trademarks and the Retained Trade Secrets).

 

1.7                                 “LicensorAffiliate” means any other person, entity or organization controlling,controlled by or under common control with, at any time Licensor on or afterthe Closing Date, with “control” for such purpose meaning the possession,directly or indirectly, of the power to direct or cause the direction of the managementand policies of such person, entity or organization, whether through theownership of voting securities or voting interests, by contract or otherwise.

 

1.8                                 “LicensedIntellectual Property” means all Licensor Owned Intellectual Property, aslisted in the attached Exhibit A; provided, however that Licensor shallhave the right to delete, from time to time, from the definition of LicensedIntellectual Property, any Patents which Licensor chooses in its solediscretion to abandon.  In the case thatLicensor abandons any Patent(s) as permitted pursuant to the foregoingsentence, the license granted under this Agreement for such Patent shallimmediately terminate, Licensor shall have no further obligation to HSI withrespect to such Patent(s) and Licensor will give notice and HSI will have therights to take ownership of such Patent as set forth in Section 2.3.

 

1.9                                 “LicensorOwned Intellectual Property” means those of the Purchased Assets which areIntellectual Property.

 

1.10                           “Territory”means the Republic of Korea.

 

2.                                                                                                               LICENSEGRANT TO HSI

 

2.1                                 LICENSEGRANT

 

As of the Closing Date and subject to the terms andconditions of this Agreement, Licensor hereby grants to HSI:

 

(a)                                  forthe period of four (4) years from the Closing Date (“Initial Term”),exclusive (including to the exclusion of Licensor) within the Territory, non-transferable(except as permitted under Section 10.12 of this Agreement), right andlicense under and to the Licensed Intellectual Property to copy and use anysuch Licensed Intellectual Property to make, have made, use, sell, lease andotherwise dispose of or commercially exploit products or services in theBusiness using or containing the Licensed Intellectual Property, provided thatsuch products or services are solely used within the Territory (as such phraseis hereinafter defined).  For purpose ofclarity, during the Initial Term, products that are made with the LicensedIntellectual Property cannot be sold or distributed (i) by HSI (or any ofits successors or licensees or HSI Affiliates) outside the Territory or(ii) by Licensor (or any of its successors or licensees or LicensorAffiliate) inside the Territory.  Foravoidance of doubt, products that are manufactured in Korea but used outside ofKorea shall not qualify

 

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as products “used withinthe Territory,” and where a product is used shall be determined by the site ofthe original installation of the product. Notwithstanding the foregoing, nothing in this Section 2 shall beinterpreted to allow HSI and/or any HSI Affiliate(s) to directly or indirectly,compete with Licensor or Licensor Affiliates in violation of the covenant notto compete outside the Territory in Section 5.08 of the Asset PurchaseAgreement or to allow Licensor and/or any Licensor Affiliate(s) to directly orindirectly compete with HSI or HSI Affiliates in violation of the covenant notto compete within the Territory in such Section;

 

(b)                                 forthe Initial Term, non-exclusive, non-transferable (except aspermitted under Section 10.12 of this Agreement), worldwide right andlicense under and to the Licensed Intellectual Property, to copy and use anysuch Licensed Intellectual Property to make, have made, use, sell, lease andotherwise dispose of or commercially exploit products or services in theBusiness using or containing the Licensed Intellectual Property to the extent(and only to the extent) reasonably required in connection with complying withand enforcing contractual obligations to and of customers outside the Territorypursuant to agreements listed in Section 5.08(a) of the DisclosureSchedule to the Asset Purchase Agreement in effect on the date of theAsset Purchase Agreement; and

 

(c)                                  afterthe Initial Term, perpetual, non-exclusive, non-transferable (exceptas permitted under Section 10.12 of this Agreement), worldwide right andlicense under and to the Licensed Intellectual Property, to copy and use anysuch Licensed Intellectual Property to make, have made, use, sell, lease andotherwise dispose of or commercially exploit products or services in theBusiness using or containing the Licensed Intellectual Property.

 

2.2                                 SUBLICENSE

 

HSI may sublicense its rights and license under thisAgreement to the extent (and only to the extent) reasonably required in connectionwith the following activities subject to the following conditions and terms:

 

(a)                                  grantof sublicense to third parties or HSI Affiliates for the sole purpose of havingthem manufacture or supply to HSI products and/or services using or containingthe Licensed Intellectual Property for entire consumption of such productsand/or services by HSI or HSI’s customers to the extent satisfying furnishingcontractual obligations from HSI to its customers;

 

(b)                                 grantof sublicense to HSI’s customers only to the extent that rights granted by suchsublicense are necessary to allow such customers to use products and/orservices provided by or on behalf of HSI using or containing the LicensedIntellectual Property;

 

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(c)                                  grantof sublicense to HSI Affiliates, upon approval of Licensor, which will not beunreasonably withheld or delayed, for the sole purpose of having HSI Affiliatescontinue the operation of the HSI business activities in the event that HSIceases, and transfers to HSI Affiliates, such business activities, whichsublicenses may authorize such HSI Affiliates to exercise any or all of therights of HSI set forth in this Agreement; and

 

(d)                                 grantof sublicense to third parties, upon approval of Licensor, for defense and/orsettlement of claims or actions arising in connection with any agreements orthe conduct, activities, products or services in the Business prior to theClosing Date; provided that, in no event, may HSI enter into any settlement or takeany action which limits or otherwise compromises the right, title and interestsof Licensor, Licensor Affiliates or any transferee or assignee of the PurchasedAssets or rights of Licensor or any assignee of Licensor to the PurchasedAssets or under any licenses transferred by HSI to Licensor.  For avoidance of doubts, HSI may not grant asublicense to Motorola to the extent that the sublicense extends after theClosing Date.

 

2.3                                 ABANDONMENTOF PATENTS

 

In the event that Licensor determines that it shallcease to maintain any or all of the Patents which are licensed to HSIhereunder, it shall provide written notice to HSI of such determination atleast thirty (30) days prior to the date on which the Patent is due tolapse or become abandoned.  Upon HSI’srequest provided in writing at least twenty (20) days prior to the datethe Patent(s) lapse(s) or become(s) abandoned (or for an otherwise reasonableperiod of time, in the event Licensor fails to provide notice of its intent toabandon a Patent at least thirty (30) days prior to the date on which thePatent is due to lapse or become abandoned), and at HSI’s sole cost, Licensorwill then assign, convey and transfer to HSI all of Licensor’s then existingrights, title and interest in and to such Patent(s) subject to Licensor’sretaining an unrestricted, sublicenseable, non-exclusive, world-wide,irrevocable, fully-paid license under the applicable Patent(s) (bound byterritorial limitations under Section 2.1 of this Agreement).  Upon such transfer, each such Patent shallcease to be Licensed Intellectual Property. The right reserved by HSI under this section shall not be assignable tothird parties (except in connection with a transfer of HSI’s business).

 

3.                                       NOIMPLIED LICENSES; INTELLECTUAL PROPERTY RIGHTS NOTICES

 

3.1                                 NOIMPLIED LICENSE

 

Except for the licenses expressly granted in thisAgreement, neither Party grants to the other Party by implication, estoppel orotherwise any license or other right to any of its Intellectual Property.  In addition, neither Party grants anylicense, release or other right expressly, by implication, by estoppel orotherwise to any third party, including without limitation any Affiliate(s) ofthe other Party.

 

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4.                                       FEESAND PAYMENTS

 

4.1                                 LICENSEFEES

 

In consideration of the licenses granted to HSIhereunder, HSI shall pay Licensor semiyearly License Fees in the amount of[***] accrued during each fiscal half-year for [***] after the ClosingDate.  Thereafter, the licenses grantedto HSI hereunder shall be royalty-free and fully paid-up.  During the above-referenced 15-yearperiod, HSI shall submit quarterly reports of License Fees accrued for eachfiscal quarter after the Closing Date within thirty (30) calendar daysafter the end of the relevant fiscal quarter.

 

4.2                                 TAX

 

Responsibility for withholding taxes levied by theKorean government authority on Licensor with respect to the License Fees shallbe determined in mutually agreeable terms to each Party prior to the Closing.  All of the License Fees payable by HSI toLicensor shall be paid without any deduction or reduction for any other taxesor charges imposed in the Territory.  Inall other respects, HSI is solely responsible for all the taxes levied by anyKorean government authority on HSI with respect to its operations, income andtransactions under this Agreement.  Eachparty agrees to deliver to the other Party an official proof of any taxeswithheld or paid on behalf of the other party upon request of the other party.

 

4.3                                 LICENSEFEE PAYMENT

 

All License Fee payments shall be made by wiretransfer to the following account:

 

[Licensor AccountInformation]

 

HSI shall pay to Licensor the License Fee due withrespect to [***].  All License Feepayments made pursuant to this Agreement are non-refundable unless thereis a miscalculation and overpayment.

 

4.4                                 AUDIT

 

HSI agrees to keep and maintain accurate books andrecords of all its activities in sufficient detail to enable the License Feesdue to Licensor to be determined.  HSIshall keep such books and records for two (2) years from the date ofrelevant payment due.  HSI shall alsogrant Licensor, upon Licensor’s reasonable request, the right to have anindependent auditor audit the books and records of HSI, during HSI’s regularbusiness hours and no more frequently than once per calendar year with a 30 dayprior written notice, solely for the purpose of, and to the extent necessaryto, verify the correctness of the License Fees paid by HSI to Licensor.  Any such audit shall be conducted in amanner that minimizes the interference with HSI’s business activities.  The costs of such audit shall be borne byLicensor; provided that HSI shall bear the costs of such audit in the event thediscrepancy is more than 10% of the License Fees due.  The status of the records being audited shall be considered asConfidential Information of HSI subject to confidentiality obligations ofSection 5.

 

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5.                                       CONFIDENTIALITY

 

Each Party shall protect the other’s ConfidentialInformation from unauthorized dissemination and use with the same degree ofcare that such Party uses to protect its own like information, but not lessthan reasonable care.  Each Party agreesthat the Confidential Information of the other Party may be made available onlyto those officers, directors, employees, contractors, consultants or agents whoagree to be bound to the receiving Party by confidentiality obligations atleast as protective as the provisions of this paragraph.  Neither Party will use the other’sConfidential Information except as permitted by the licenses hereunder or forpurposes other than those necessary to directly further the purposes of thisAgreement. Trade secrets and know-how of HSI that were transferred toUTSI or UTSI Affiliate designated by UTSI under the Asset Purchase Agreementare the Confidential Information of UTSI, UTSI Affiliate or Licensor (even ifsuch trade secrets and know-how relates to those of the former or currentemployees of HSI), and HSI shall not use them, except in accordance with thelicenses granted under this Agreement. Except as permitted by the licenses hereunder or other provisionshereof, neither Party will disclose to any third parties the other’sConfidential Information without the prior written consent of the other Party.Except as expressly provided in this Agreement, no ownership or license rightis granted in any Confidential Information. The Parties’ obligations of confidentiality under this Agreement shallnot be construed to limit either Party’s right to independently develop oracquire products without use of, or reference to, the other Party’sConfidential Information.  Neither Partyshall be liable to the other Party for disclosure of any information receivedhereunder if such disclosure is made pursuant to a governmental or judicialmandate, provided that the receiving Party shall have given the other Partynotice of such mandate immediately upon its knowledge thereof and prior to anydisclosure in compliance therewith, and, provided further, that the receivingParty shall fully cooperate (at the other Party’s sole cost and expense) withany efforts the other Party may take to intervene in any such proceeding or tootherwise prevent such disclosure.

 

6.                                       IMPROVEMENTS

 

6.1                                 JointOwnership of Improvements

 

In the event that the Parties agree to jointly developImprovement(s), the Parties will negotiate with each other in good faith andenter into a separate agreement with respect to rights, title and ownership ofsuch Improvement conceived, discovered or reduced to practice jointly by bothParties.

 

6.2                                 NewImprovements by Either Party.

 

Each Party shall retain all right, title and interestin any and all Intellectual Property in and to Improvements, conceived, discoveredor reduced to practice solely by that Party.

 

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7.                                       INFRINGEMENT

 

7.1                                 INFRINGEMENTAND UNLAWFUL USE BY THIRD PARTIES

 

HSI shall notify Licensor promptly and fully of anyinfringement, unauthorized or unlawful use of the Licensed IntellectualProperty that comes to its notice or is made aware.  With respect to infringement occurring in the Territory duringthe Initial Term, upon request by HSI, Licensor shall either (with theselection being in Licensor’s entire discretion):

 

(i)                                     atHSI’s expenses, bring a lawsuit against any party that is or is alleged to beinfringing, using without authorization or using unlawfully any of the LicensedIntellectual Property.  When requestedto do so by Licensor, HSI shall fully cooperate in connection with suchlawsuit, including but not limited to joining such lawsuit as a party; or

 

(ii)                                  makea good faith determination, taking into account the interests of both HSI andLicensor, as to whether the benefits of allowing HSI to pursue a lawsuit orother proceeding against any such party with respect to the (alleged)infringement notified by HSI outweigh the risks and/or harms.  If Licensor thus determines that they do,HSI may bring a lawsuit or other proceeding against such party in its own nameat HSI’s own expenses, without any prejudice to Licensor, provided that HSIshall indemnify and/or hold harmless Licensor or License Affiliate from anylosses that Licensor or Licensor Affiliate incurs from such lawsuit or proceedingbrought by HSI.  If Licensor thusdetermines that they do not, Licensor will negotiate in good faith with HSI anadjustment to the royalty charged hereunder during the Initial Term to accountfor actual damage caused to HSI from any infringement of the LicensedIntellectual Property; provided, however, Licensor shall have no obligation tonegotiate in good faith a royalty adjustment if Licensor (x) reasonablybelieves that there is no infringement of the Licensed Intellectual Property or(y) would have allowed HSI to bring a lawsuit or proceeding but Licensorreasonably determined that HSI did not have the financial means to indemnifyLicensor and Licensor Affiliates from any losses arising out of such lawsuit orproceeding, and that, upon request by Licensor, HSI failed to prove itscapacity of such financial means.

 

Subject to the foregoing indemnification obligationsand any other agreement by Licensor and HSI, in any such lawsuit or proceedingbrought by HSI at HSI’s expense, HSI shall be entitled to retain all damagesand other relief awarded.

 

7.2                                 INFRINGEMENTAND UNLAWFUL USE BY THE PARTIES

 

If any third party brings a lawsuit or otherproceeding against a Party alleging infringement of or alleging unlawful use ofany Intellectual Property, including but not limited to patents or tradesecrets, arising from the Party’s use of the Licensed Intellectual Property orotherwise, the Party shall have the sole responsibility to take whatever stepsit deems advisable

 

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to answer suchallegation and to defend itself in such lawsuit or proceeding and the otherParty shall not be responsible for the costs of defending such lawsuit orproceeding, for any resulting judgment in law or equity or for the payment ofany award of damages or arbitral award. For avoidance of doubts, HSI shall be responsible for any and all claimsmade by Motorola against HSI or HSI Affiliate’s activities on or before theClosing and thereafter.  Licensor shallbe responsible for any and all claims made by Motorola against Licensor orLicensor Affiliate’s activities after the Closing.  In the event that any third party brings a lawsuit or otherproceeding against HSI or HSI Affiliate as to products or services Licensor orLicensor Affiliates make, have made, use, sell, lease or otherwise dispose ofor commercially exploit using or containing the Licensed Intellectual Propertyafter the Closing, upon notice by HSI to Licensor, Licensor shall defend HSI orHSI Affiliate in such lawsuit or proceeding or indemnify and/or hold harmlessHSI or HSI Affiliate from loss that HSI or HSI Affiliate incurs from suchlawsuit or proceeding. In the event that any third party brings a lawsuit orother proceeding against Licensor or Licensor Affiliate as to products orservices HSI or HSI Affiliates make, use, sell, lease or otherwise dispose ofor commercially exploit using or containing the Licensed Intellectual Propertyafter the Closing, upon notice by Licensor to HSI, HSI shall defend Licensor orLicensor Affiliate in such lawsuit or proceeding or indemnify and/or holdharmless Licensor or Licensor Affiliate from loss that Licensor or LicensorAffiliate incurs from such lawsuit or proceeding.

 

8.                                       REPRESENTATIONS& WARRANTIES; DISCLAIMERS

 

8.1                                 REPRESENTATIONS& WARRANTIES

 

(a)                                  HSIhereby represents and warrants that (i) it has the full power andauthority to enter into this Agreement, and (ii) this Agreement has beenduly executed and delivered by HSI and, assuming the due execution hereof byLicensor, this Agreement constitutes the legal, valid and binding obligation ofHSI, enforceable in accordance with its terms.

 

(b)                                 Licensorrepresents and warrants that (i) it has the full power and authority toenter into this Agreement and (ii) this Agreement has been duly executedand delivered by Licensor and, assuming the due execution hereof by HSI, thisAgreement constitutes the legal, valid and binding obligation of Licensor,enforceable in accordance with its terms.

 

8.2                                 DISCLAIMERS

 

EXCEPT AS EXPRESSLY PROVIDED IN SECTION 8.1 ABOVE ORTHE ASSET PURCHASE AGREEMENT, EACH PARTY MAKES NO, AND EXPRESSLY DISCLAIMS ANYAND ALL, FURTHER REPRESENTATIONS AND WARRANTIES, WHETHER EXPRESS OR IMPLIED ORSTATUTORY, INCLUDING ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR APARTICULAR PURPOSE AND NON-INFRINGEMENT, WITH RESPECT TO THE SUBJECTMATTER OF THIS AGREEMENT.

 

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9.                                       TERMAND TERMINATION

 

9.1                                 ThisAgreement shall commence on the Effective Date and shall continue unlessterminated earlier in accordance with provisions of this Agreement.

 

9.2                                 ThisAgreement shall be terminable immediately upon the sending of a writtentermination notice upon the occurrence of one or more of the following events:

 

(a)                                  byeither Party hereto, if the other Party shall commit a material breach of anyof its obligations under this Agreement, and, except as provided in subsection(b) below, the breach is not remedied or cured within thirty (30) calendardays from the giving of written notice requiring such breach to beremedied.  For purposes of clarity, thenon-payment of the License Fee by HSI to Licensor pursuant toSection 4.3 of this Agreement shall constitute a material breach;

 

(b)                                 byeither Party hereto, if at any time the other Party ceases performing all ofits obligations pursuant to this Agreement due to any event of Force Majeurefor a period of at least sixty (60) consecutive calendar days from thegiving of written notice requiring that performance be resumed, unless any periodof such cessation is attributable in whole or in part to any breach by theother party of any of its obligations pursuant to this Agreement;

 

(c)                                  byLicensor, if HSI or its creditors or any other eligible party shall file forHSI’s liquidation, bankruptcy, reorganization, compulsory composition, ordissolution, unless a court of competent jurisdiction dismisses such filing orthe filing is dismissed by the filing party within thirty (30) calendardays following the date of filing, or if HSI is unable to pay its debts as theybecome due, has explicitly or implicitly suspended payment of its debts as theybecame due (except debts contested in good faith), or if the creditors of HSIhave taken over its management, or if the relevant financial institutions havesuspended HSI’s clearing house privileges, or if any material or significantpart of HSI’s undertaking, property, or assets shall be intervened in,expropriated, or confiscated by action of any governmental authority;

 

(d)                                 byLicensor, if any of the following should occur without its consent, in such away that Licensor reasonably determines is detrimental to its interests:(i) there is a merger or corporate reorganization of HSI,  (ii) there is any change in theownership of HSI or the persons having principal authority for the managementof HSI, or (iii) there is a sale or transfer of all or substantially allof the assets of HSI.  For avoidance ofdoubts, if the foregoing should occur in such a way that Licensor reasonablydetermines is not detrimental to its interests, Licensor will not unreasonablywithheld or delay its consent.

 

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(e)                                  byLicensor, if the following should occur without its consent: another person orentity engaged in CDMA infrastructure equipment, cordless base station orsubscriber unit business acquires direct or indirect control of HSI; or

 

(f)                                    byLicensor, if HSI or any person or entity that has direct or indirect control ofHSI makes and/or files a claim against Licensor and/or any of LicensorAffiliates contesting Licensor’s ownership or the validity of the LicensedIntellectual Property.

 

Notwithstanding the foregoing provisions, solely forpurposes of exercising the termination rights under this Section 9, HSIshall not be deemed to be in breach of this Agreement for its failure to paydisputed License Fees, provided that it has paid the undisputed amount ofLicense Fees.

 

9.3                                 EFFECTSOF TERMINATION

 

Upon termination or expiration of this Agreement, allof the rights and license granted to each Party by the other Party under thisAgreement shall immediately terminate and revert to the granting Party.  Upon termination of this Agreement, allaccrued License Fees shall be immediately due.

 

9.4                                 EFFECTSOF INSOLVENCY

 

The Parties hereby agree that, if any proceeding shallbe instituted by or against either Party seeking to adjudicate it a bankrupt orinsolvent, or seeking liquidation, winding up, reorganization, arrangement,adjustment, protection, relief or composition of it or its debts under any lawrelating to bankruptcy, insolvency or reorganization, or relief of debtors, orseeking an entry of an order of relief or the appointment of a receiver,trustee or other similar official for it or any substantial part of its propertyor the Party shall take any action to authorize any of the foregoing actions,the other Party shall have and continue to have the right to retain and enforceits rights under this Agreement, including but not limited to the right tocontinue to use the Licensed Intellectual Property (in case the other Party isHSI) or the Intellectual Property pursuant to Section 2.3 of thisAgreement (in case the other Party is Licensor) in accordance with the termsand conditions of this Agreement, to the extent permissible under the relevantlaw.  The Parties agree that HSI (incase the other Party is HSI), as a licensee of the Licensed IntellectualProperty, or Licensor (in case the other Party is Licensor), as a licensee ofthe Intellectual Property pursuant to Section 2.3 of this Agreement, shallretain and may fully exercise all of the rights and elections to the fullextent permitted under Section 365(n) of the United States Bankruptcy Code(11 U.S.C. Section 101 et seq.) or any similar law of the Republic ofKorea.  All rights and licenses grantedunder or pursuant to this Agreement by Licensor to HSI are, and shall otherwisebe deemed to be, licenses of rights to “intellectual property” as defined inSection 365(n) of the United States Bankruptcy Code.

 

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10.                                 GENERAL

 

10.1                           RELATIONSHIPOF THE PARTIES

 

This Agreement does not create a fiduciary or agencyrelationship between HSI and Licensor, each of which shall be and at all timesremain independent companies for all purposes. Nothing in this Agreement is intended to make either Party a general orspecial agent, joint venturer, partner or employee of the other for anypurpose.

 

10.2                           COUNTERPARTS

 

This Agreement may be executed in two or morecounterparts, all of which shall be considered one and the same agreement, andshall become effective when one or more counterparts have been signed by eachof the Parties and delivered to the other Party.

 

10.3                           GOVERNINGLAW; CONSENT TO JURISDICTION

 

This Agreement shall be governed by and construed inaccordance with the laws of the Republic of Korea without giving effect to therules of conflict of laws of the Republic of Korea that would requireapplication of any other law.  Licensorand HSI each consent to and hereby submit to the non-exclusivejurisdiction of the Seoul District Court located in the Republic of Korea inconnection with any action, suit or proceeding arising out of or relating tothis Agreement, and each of the Parties hereto irrevocably waives, to thefullest extent permitted by law, any objection which it may now or hereafterhave to the laying of the venue of any such proceeding brought in such a courtand any claim that any such proceeding brought in such a court has been broughtin an inconvenient forum.

 

10.4                           ENTIREAGREEMENT

 

This Agreement and the Exhibits hereto (includingagreements incorporated herein) and the Asset Purchase Agreement contain theentire agreement between the Parties with respect to the subject matter hereofand there are no agreements, understandings, representations or warrantiesbetween the Parties other than those set forth or referred to herein.

 

10.5                           NOTHIRD-PARTY BENEFICIARIES

 

Nothing in this Agreement, express or implied, isintended to or shall confer on any Person other than the Parties hereto andtheir respective successors or assigns any rights (including third-partybeneficiary rights), remedies, obligations or liabilities under or by reason ofthis Agreement.  This Agreement shallnot provide third parties with any remedy, claim, liability, reimbursement,cause of action or other right in excess of those existing without reference tothe terms of this Agreement.

 

10.6                           INTERPRETATION;ABSENCE OF PRESUMPTION

 

(a)                                  Forthe purposes hereof, (i) words in the singular shall be held to includethe plural and vice versa and words of one gender shall be held to include

 

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the other gender as thecontext requires, (ii) the terms “hereof,” “herein,” and “herewith” andwords of similar import shall, unless otherwise stated, be construed to referto this Agreement as a whole (including all of the Exhibits hereto) and not toany particular provision of this Agreement, and Article, Section, paragraph andExhibit references are to the Articles, Sections, paragraphs and Exhibitsto this Agreement unless otherwise specified, (iii) the word “including”and words of similar import when used in this Agreement means “including,without limitation,” unless the context otherwise requires or unless otherwisespecified, (iv) the word “or” shall not be exclusive, (v) provisionsshall apply, when appropriate, to successive events and transactions, and(vi) all references to any period of days shall be deemed to be to therelevant number of calendar days.

 

(b)                                 ThisAgreement shall be construed without regard to any presumption or rulerequiring construction or interpretation against the Party drafting or causingany instrument to be drafted.

 

10.7                           FORCEMAJEURE

 

A Party shall not be liable for a failure or delay inthe performance of any of its obligations under this Agreement where suchfailure or delay is the result of conditions beyond the control of said Party,such as fire, flood, or other natural disaster, act of God, war, embargo, riot,or the intervention of any government authority, providing that the Partyfailing in or delaying its performance immediately notifies the other Party ofits inability to perform and states the reason for such inability.

 

10.8                           PUBLICITY

 

Neither Party shall, without the approval of the otherParty, make any press release or other public announcements concerning theterms of the transactions contemplated by this Agreement, except as and to theextent that any such Party shall be so obligated by judicial order, law or securitiesexchange rule or regulation or pursuant to a lawful request of a governmentagency, provided that the Party shall notify the other Party of any suchobligation by or lawful request of a government agency prior to anysubmission/publication of press release or other public announcements.

 

10.9                           FURTHERASSURANCES

 

Each Party shall cooperate and take such action as maybe reasonably requested by another Party in order to carry out the provisionsand purposes of this Agreement and the transactions contemplated hereby.

 

10.10                     EXPORTCONTROL

 

The Parties shall comply with any and all exportregulations and rules now in effect or as may be issued from time to time bythe Korean governmental authority, or any other governmental authority whichhas jurisdiction relating to the export of technology.

 

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10.11                     NOTICES

 

Any notice, request, demand, waiver, consent, approvalor other communication which is required or permitted to be given to any Partyhereunder shall be in writing and shall be deemed duly given only upon deliveryto the Party personally (including by reputable overnight courier service),when telecopied (with confirmation of transmission having been received) duringnormal business hours or three business days after being mailed by registeredor certified mail (return receipt requested), with postage and registration orcertification fees thereon prepaid, addressed to the Party at its address setforth below (or at such other address for a Party as shall be specified by suchParty by like notice):

 

If to Licensor:

 

[Licensor]

 

c/o[         ]

[               ]

Fax:[       ]

Attention: [        ]

 

If to HSI:

 

Hyundai Syscomm, Inc.

San 136-1

Ami-ri, Bubal-eub

Ichon-si, Kongki-do

467-701 Korea

Fax: [      ]

Attention:[        ]

 

10.12                     ASSIGNMENT

 

This Agreement shall be binding upon and inure to thebenefit of the Parties hereto and their respective successors and permittedassigns; provided, however, subject to Section 9.2, HSI shall not assignits rights or delegate its obligations under this Agreement without the expressprior written consent of Licensor.

 

10.13                     HEADINGS;DEFINITIONS

 

The section and article headings contained in thisAgreement are inserted for convenience of reference only and will not affectthe meaning or interpretation of this Agreement.

 

10.14                     AMENDMENT

 

This Agreement may not be amended, modified,superseded, canceled, renewed or extended except by a written instrument signedby the Party to be charged therewith.

 

C-14

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10.15                     WAIVER;EFFECT OF WAIVER

 

No provision of this Agreement may be waived except bya written instrument signed by the Party waiving compliance.  No waiver by any Party hereto of any of therequirements hereof or of any of such Party’s rights hereunder shall releasethe other Parties from full performance of their remaining obligations statedherein.  No failure to exercise or delayin exercising on the part of any Party hereto any right, power or privilege of suchParty shall operate as a waiver thereof, nor shall any single or partialexercise of any right, power or privilege preclude any other or furtherexercise thereof or the exercise of any other right, power or privilege by suchParty.

 

10.16                     SPECIFIC PERFORMANCE;INJUNCTIVE RELIEF

 

The Parties hereto each acknowledge that, in view ofthe uniqueness of the subject matter hereof, the Parties hereto would not havean adequate remedy at law for money damages in the event that this Agreementwere not performed in accordance with its terms, and therefore agree that theParties hereto shall have the right to a claim for injunctive relief and beentitled to specific enforcement of the terms hereof in addition to any otherremedy to which the Parties hereto may be entitled at law or in equity.

 

10.17                     SURVIVAL

 

The respective rights and obligations of the Partiesunder Sections 5, 8 and 9.3, and, with respect to such surviving rightsand obligations,Sections 10.2, 10.3, 10.4, 10.11, 10.13, 10.16and 10.17 shall survive the termination of this Agreement.

 

C-15

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IN WITNESS WHEREOF, the Parties hereto have causedthis Agreement to be duly executed on their behalf as of the date first writtenabove.

 
|   | HYUNDAI SYSCOMM, INC. |
|--------|-----------------------|
|   |                  |
|   |                  |
|   | By                    |   |   |
|   |                  | Name: |   |
|   |                  | Title: |   |
|   |                  |   |   |
|   |                  |   |   |
|   | [LICENSOR]            |   |
|   |                  |   |   |
|   |                  |   |   |
|   | By                    |   |   |
|   |                  | Name: |   |
|   |                  | Title: |   |

 

C-16

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**EXHIBIT A**

** **

1.                                                                                       Allof the right, title and interest in, to and under the Owned IntellectualProperty (including any Patents claiming Trade Secrets existing as of theClosing Date) acquired by Licensor pursuant to the Asset Purchase Agreement,including without limitation, the patents, patents pending, utility models,utility models pending and programs listed in Schedule 3.12(a)(1) attachedhereto, and including copies and tangible embodiments thereof in whatever formor medium.

 

2.                                                                                       Allof the right, title and interest in, to and under the Transferred IP Agreementsacquired by Licensor pursuant to the Asset Purchase Agreement, limited to thosespecifically listed in Schedule 2 attached hereto, and including copiesand tangible embodiments thereof in whatever form or medium.

 

3.                                                                                       Allliterature and graphical or written expressions, in whatever form, related tothe Owned Intellectual Property acquired by Licensor pursuant to the AssetPurchase Agreement.

 

[Attach Schedule 3.12(a) and Schedule 2.]

 

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Exhibit 2.05(a)(i)

 

Form of Bill of Saleand Assignment

 

**BILL OF SALE ANDASSIGNMENT**

** **

BILL OF SALE AND ASSIGNMENT, dated as of[             ], 2004(this ”Bill of Sale and Assignment”), from HYUNDAI SYSCOMM, INC., acorporation organized and existing under the Laws of Korea (the ”Seller”),to UTSTARCOM, INC., a Delaware corporation (the ”Purchaser”).

 

WHEREAS, the Seller, 3R Inc., a corporation organizedand existing under the laws of Korea, Dr. Seong-Ik Jang and the Purchaser haveentered into an Asset Purchase Agreement, dated as of February 26, 2004(the ”Asset Purchase Agreement”; unless otherwise defined herein,capitalized terms shall be used herein as defined in the Asset PurchaseAgreement); and

 

WHEREAS, the execution and delivery of this Bill ofSale and Assignment by the Seller is a condition to the obligations of thePurchaser to consummate the transactions contemplated by the Asset PurchaseAgreement;

 

NOW, THEREFORE, in consideration of the promises andmutual agreements set forth in the Asset Purchase Agreement, and other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the Seller hereby agrees as follows:

 

1.                                       Saleand Assignment of Assets and Properties. The Seller hereby sells, assigns, transfers, conveys, grants, bargains,sets over, releases, delivers, vests and confirms unto the Purchaser and itssuccessors and assigns, forever, the entire right, title and interest of theSeller free and clear of all Encumbrances (other than Permitted Encumbrances)in and to any and all of the Purchased Assets, subject to (i) co-ownershipor cross-licensing rights of third parties existing on the date of the AssetPurchase Agreement pursuant to agreements specified in Section 3.12(c) ofthe Disclosure Schedule and (ii) Section 3.31 of the Asset PurchaseAgreement.

 

2.                                       Obligationsand Liabilities Not Assumed. Nothing expressed or implied in this Bill of Sale and Assignment shallbe deemed to be an assumption by the Purchaser or its subsidiaries of anyLiabilities of the Seller.  Other thanthe Assumed Liabilities, neither the Purchaser nor its subsidiaries by thisBill of Sale and Assignment, agree to assume or agree to pay, perform ordischarge any liabilities of the Seller of any nature, kind or descriptionwhatsoever.

 

3.                                       FurtherAssurances.  The Seller herebycovenants and agrees that, at any time and from time to time after the date ofthis Bill of Sale and Assignment, at the Purchaser’s request, the Seller willdo, execute, acknowledge and deliver, or will cause to be done, executed,acknowledged and delivered, any and all further acts, conveyances, transfers,assignments, and assurances as necessary to grant, sell, convey, assign,transfer, set over to or vest in the Purchaser any of the Purchased Assets.

 

C-18

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4.                                       Powerof Attorney.  The Seller herebyconstitutes and appoints the Purchaser, its successors and assigns, the trueand lawful attorney and attorneys of the Seller with full power ofsubstitution, in the name of the Purchaser or in the name and stead of the Sellerbut on behalf of and for the benefit of the Purchaser, its successors andassigns (and at the expense of the Seller):

 

(a)                                  tocollect, demand and receive any and all Purchased Assets transferred hereunderand to give receipts and releases for and in respect of the same;

 

(b)                                 toinstitute and prosecute in the name of the Seller, or otherwise, at the expenseand for the benefit of the Purchaser any and all actions, suits or proceedings,at law, in equity or otherwise, which the Purchaser may deem proper in order tocollect, assert or enforce any claim, right or title of any kind in or to thePurchased Assets hereby sold and assigned to the Purchaser or intended so tobe, to defend or compromise any and all such actions, suits or proceedings inrespect of any of such Purchaser Assets, and to do all such acts and things inrelation thereto as the Purchaser shall deem advisable for the collection orreduction to possession of any of such Purchased Assets;

 

(c)                                  totake any and all other reasonable action designed to vest more fully in thePurchaser the Purchased Assets hereby sold and assigned to the Purchaser orintended so to be and in order to provide for the Purchaser the benefit, use,enjoyment and possession of such Assets; and

 

(d)                                 todo all reasonable acts and things in relation to the Purchased Assets sold andassigned hereunder.

 

The Seller acknowledges that the foregoing powers arecoupled with an interest and shall be irrevocable by it or upon its subsequentdissolution or in any manner or for any reason.  The Purchaser shall be entitled to retain for its own account anyamounts collected pursuant to the foregoing powers, including any amountspayable as interest with respect thereto. The Seller shall from time to time pay to the Purchaser, when received,any amounts that shall be received directly or indirectly by the Seller(including amounts received as interest) in respect of any Purchased Assetssold, assigned or transferred to the Purchaser pursuant hereto.

 

5.                                       NoThird Party Beneficiaries.  ThisBill of Sale and Assignment shall be binding upon and inure solely to thebenefit of the Purchaser and its permitted assigns and nothing herein, expressor implied, is intended to or shall confer upon any other Person, any legal orequitable right, benefit or remedy of any nature whatsoever, under or by reasonof this Bill of Sale and Assignment.

 

6.                                       Severability.  If any term or other provision of this Billof Sale and Assignment is invalid, illegal or incapable of being enforced byany Law or public policy, all other terms and provisions of this Bill of Saleand Assignment shall nevertheless remain in full force and effect so long asthe economic or legal substance of the transactions contemplated hereby is notaffected in any manner materially adverse to either the Seller or thePurchaser.

 

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7.                                       GoverningLaw.  This Bill of Sale andAssignment shall be governed by, and construed in accordance with, the laws ofthe State of New York applicable to contracts executed in and to be performedin that State.

 

8.                                       DisputeResolution.  Any dispute,controversy or claim arising out of or in connection with this Bill of Sale andAssignment shall be finally settled by arbitration under the Rules ofArbitration of the International Chamber of Commerce by three arbitratorsappointed in accordance with the Rules of Arbitration of the InternationalChamber of Commerce.  The venue of thearbitration shall be San Francisco, California, USA.  The language of the proceedings shall be English.

 

----

 

IN WITNESS WHEREOF, this Bill of Sale and Assignmenthas been executed by the Seller as of the date first above written.

 

 
|   | HYUNDAI  SYSCOMM, INC. |
|--------|------------------------|
|   |                   |
|   |                   |
|   | By:                    |   |   |
|   |                   | Name: |
|   |                   | Title: |

 

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Exhibit 2.05(a)(ii)

 

Form of Assignmentof Owned Intellectual Property

** **

**ASSIGNMENT OFOWNED INTELLECTUAL PROPERTY**

 

This ASSIGNMENT OF OWNEDINTELLECTUAL PROPERTY (this ”Assignment”), effective the[      ] day of[             ], 2004,is made and entered into by and between HYUNDAI SYSCOMM, INC., a corporationorganized and existing under the Laws of Korea (the “Assignor”), andUTSTARCOM, INC., a Delaware corporation (“Assignee”) (each a ”Party,” and collectively,the ”Parties”).  Capitalizedterms used herein but not otherwise defined herein shall have the meanings setforth in the Purchase Agreement (as defined below).

 

WHEREAS, Assignor is theowner of each of (i) the patents and patent applications set forth onSchedule A hereto (the ”Patents”); and (ii) the copyrightregistrations and copyright applications set forth on Schedule B hereto(the ”Copyrights”) ((i)-(ii), collectively, the ”PurchasedRegistered Intellectual Property”);

 

WHEREAS, Assignor,Assignee, 3R Inc., a corporation organized and existing under the laws ofKorea, and Dr. Seong-Ik Jang entered into that certain Asset PurchaseAgreement, dated as of February 26, 2004 (the ”Purchase Agreement”),pursuant to which Assignee agreed to purchase the Purchased Assets fromAssignor, including all of Assignor’s right, title and interest in, to andunder the Owned Intellectual Property, including, but not limited to, thePurchased Registered Intellectual Property; and

 

WHEREAS, the executionand delivery of this Assignment is a condition to Closing.

 

NOW THEREFORE, for theconsideration set forth in the Purchase Agreement, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties agree as follows:

 

1.  Assignment.  Effective upon Closing, Assignor hereby assigns to Assignee allof Assignor’s right, title and interest in and to the Purchased RegisteredIntellectual Property, including all rights therein provided by internationalconventions and treaties, and the right to sue for past, present and futureinfringement thereof , subject to (i) co-ownership or cross-licensingrights of third parties existing on the date of the Purchase Agreement pursuantto agreements specified in Section 3.12(c) of the Disclosure Schedule and(ii) Section 3.31 of the Purchase Agreement.

 

2.  No Warranties.  Except as expressly provided in the PurchaseAgreement, Assignor makes no warranties, express or implied, with respect tothe Purchased Registered Intellectual Property.

 

3.  Further Assurances.  Assignor shall, at the cost and expense ofAssignee, timely execute and deliver any additional documents and perform suchadditional acts necessary

 

----

 

or desirable to record and perfect the interest of Assignee in and tothe Purchased Registered Intellectual Property, and shall not enter into anyagreement in conflict with this Assignment.

 

4.  Governing Law.  This Agreement shall be governed by, andconstrued in accordance with, the laws of the State of New York applicable tocontracts executed in and to be performed in that State.

 

5.  Counterparts.  This Assignment may be executed in one ormore counterparts, each of which shall be deemed an original, and all of whichtogether shall constitute one and the same agreement.

 

6.  Power of Attorney.  The Seller shall execute a power of attorneysubstantially in the form attached hereto as Attachments A and C and thePurchaser shall execute a power of attorney substantially in the form attachedhereto as Attachments B and C.

 

C-20

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IN WITNESS WHEREOF, eachParty has caused this Assignment to be executed by its duly authorizedrepresentative.

 

 
|   | HYUNDAI SYSCOMM, INC. |
|--------|-----------------------|
|   |                  |
|   |                  |
| By:    |                  |   |
|   | Name:                 |   |
|   | Title:                |   |
|   |                  |   |
|   |                  |   |
|   | UTSTARCOM, INC.       |   |
|   |                  |   |
|   |                  |   |
|   | By:                   |   |   |
|   | Name:                 |
|   | Title:                |

 

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